Introduction 

The vehicle scrappage policy, introduced in 2021 as the name suggests, This policy aims at scrapping private vehicles that are over 20 years old and commercial vehicles over 15 years old.

How Does it Work?

When we purchase a new vehicle, it comes along with a registration certificate(RC). The RC determines the age of a vehicle. As per law, private and commercial vehicles have an RC with a validity of 15 and 10 years respectively from the date of issue. The scrappage policy comes into the picture after this validity expires. 

Private and commercial vehicles undergo fitness tests via inspection and by June 1 2024, Automation Testing Centers (ATC) will determine a vehicle’s condition. 

Categories Under the vehicle scrapping policy.

What determines a vehicle’s condition?

As per motor vehicle law, every vehicle has to undergo a fitness test. After clearing a fitness test, a Fitness certificate (FC) is issued for two years and is to be renewed every two years till the vehicle becomes eight years old thereafter the vehicles have to renew (FC) every year. We can get our vehicle’s test done by booking an appointment in the nearest RTO and taking our vehicle for inspection. A valid FC is required for the renewal of an RC.

When will a vehicle be scrapped?

If a vehicle is older than 15 years of age and it fails a fitness test, it is declared unfit and an unfit vehicle cannot have its RC renewed. Such vehicles are scrapped. Personal vehicles older than 20 years will be de-registered from June 1, 2024, if they fail the automated fitness test or if  their registration certificates have not been renewed.

What’s the necessity for this law?

The national policy gives a new identity to the auto sector and promotes a circular economy, making the process of economic development more environmentally friendly. The agenda is to encourage the reduction of environmental pollution by methodological recycling of vehicles that tend to leave a larger carbon footprint nevertheless fit vehicles also harm nature. 

Moreover, the recycled parts can consist of steel, iron etc. which lessens the manufacturing costs. Furthermore, the incentives received can be utilised for buying a new car and car sales go up.

Benefits of Law

1. Decrease in air pollution.
2. Tax benefits as incentives.
3. More demand for the latest cars.
4. High revenue for the manufacturing industry.
5. Safety enhancement.

Demerits of the law

The burden of this policy falls on those who cannot afford a new vehicle and their livelihood depends on it. Suggestions are made to introduce tradeable certificates where a vehicle owner can use the certificate to buy second-hand vehicles. The advantage of this system is that the smaller players stay in business and it also creates a market for second-hand trucks. 

Incentives 

1. Owners will acquire a sum for their scrap value which is about 4-6% of the ex-showroom price of the car they wish to purchase.
2. If the owner produces a certificate of deposit, their new vehicle’s registration fees are nullified.
3. State governments are supposed to offer concessions upto 15% on the motor vehicles tax.
4. When a new car is purchased, the vehicle manufactures are subjected to give a 5% discount with a valid certificate of deposit.

Conclusion 

The pros and cons of the policy are debatable and mendments are still being made to the policy. Kuwy enables the purchase of secondhand cars if there is an economic shortage after scrapping their old cars. Happy and fun learning!