Vehicle Scrappage Policy

Context:

Ministry of Road Transport and Highways has issued the draft notification pertaining to Motor Vehicles (Registration and Functions of Vehicle Scrapping Facility Amendment) Rules, 2022.

These are amendments to the Motor Vehicles (Registration and Functions of Vehicle Scrapping Facility) Rules dated 23rd September 2021, which lay down the procedure for establishment of Registered Vehicle Scrapping Facility (RVSF).

Key highlights of the amendments are:

1. Provision for vehicle owners to apply digitally for vehicle scrapping. All applications for vehicle scrapping shall be submitted digitally. 
2. RVSFs will act as facilitation centres to help vehicle owners apply digitally to scrap their vehicles.
3. Necessary checks to be done from “Vahan ” database before submission of application by vehicle owner have been specified. 
4. These checks include surrender of hire-purchase, lease or hypothecation agreement of the vehicle, and other record of blacklisting of the vehicle by regional transport authorities. 
5. Application for vehicles failing any of these checks shall not be submitted.
6. Inclusion of more details in the Certificate of Deposit pertaining to the vehicle submitted fors crapping to enable transparency in trading of the said certificate. 
7. Introduction of Transfer Certificate of Deposit to ensure that consumers obtaining the certificate of deposit through electronic trading have a digital proof of the transaction

About the Vehicle Scrappage Policy:

• The much-awaited vehicle scrappage policy was launched by Prime Minister, in 2021.
• The ‘Voluntary Vehicle Fleet Modernisation Programme’, also known as the automobile scrappage policy, is expected to generate investments of around Rs 10,000 crore.

What does the policy aim to achieve?

The idea is to phase out cars and commercial vehicles which are older than 20 or 15 years, respectively.

• This is being done in a bid to reduce urban pollution levels and galvanise automotive sales, which continue to suffer during India’s post-COVID recovery phase. 
• The policy will bring investments worth more than ₹10,000 crore and create up to 50,000 jobs.

Fitness tests: 

The policy recommends “fitness tests” for private and commercial vehicles that are more than 20 and 15 years old respectively. 

• In the absence of a “fitness certificate,” registration of such vehicles will be automatically cancelled.
• It further recommends mandatory scrapping of all government vehicles that are more than 15 years old but is applicable only on four-wheelers.
• The fitness tests will be done at government-certified fitness centres. Also, scrappage can be done anywhere in the country, regardless of the place of vehicle registration.

Incentives:

The scheme also proposes several incentives which the owners can avail after being given a scrapping certificate. 

• This includes the scrap value for the old vehicle, which is expected to be around 5-6% of the price of a new vehicle.
• A road tax rebate of up to 25% for new personal vehicles, and 15% for new commercial vehicles, as well as a 5% discount against the scrapping certificate, have also been proposed under the policy.
• The registration fees for the purchase of a new vehicle may also be waived upon getting the old vehicle scrapped.

Significance:

• This policy will play a major role in phasing out unfit and polluting vehicles from the roads in a scientific and eco-friendly manner and it will be modernising the vehicular population on our city roads.
• it will help in phasing out the unfit and polluting vehicles across the country and promote a circular economy.