Explained: Salient features of the new Vehicle Scrapping Policy

The central government will develop a website for single-window clearance, on which the applicant willing to set up an RSVF will apply with documents and fee. State governments are to clear the proposals in 60 days.

Vehicle scrapping policy, India vehicle re-registration, vehicle re-registration, India vehicle policy, car policy, Indian Express

Union Minister for Road Transport and Highways Nitin Gadkari speaks in Lok Sabha during the ongoing Budget Session of Parliament, in New Delhi, Thursday, March 18, 2021. (LSTV/PTI Photo)

Written by: Avishek G Dastidar

5 min readNew DelhiMar 19, 2021 12:25 PM IST First published on: Mar 18, 2021 at 01:41 PM IST

The success of the newly announced Vehicle Scrapping Policy hinges on the industry or prospective investors setting up an adequate number of Automated Fitness Centres and the Scrapping Centres essential to create the environment for scrapping across India.

The centre is unlikely to give any additional sops to the industry for setting up these centres because policymakers believe these will become thriving businesses in the coming years. The testing will be against a fee, as per car type. As for scrapping centres, carmakers themselves will set up a few, while others like players from secondary or even primary steel industry etc are also expected to find the business lucrative, officials say.

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“In any case, if a carmaker sets up scrapping centres, it is likely to get a lot of value out of the recyclable parts from scrapped cars and it will probably pass on only a fraction of that to the consumer. So setting up scrapping centres is in their own interest,” a senior official said. The ministry wants carmakers to give around five per cent discount on the purchase of a new vehicle after an old one has been scrapped.

India has 51 lakh Light Motor Vehicles that are more than 20 years old and 34 lakh over 15 years old. Around 17 lakh Medium and Heavy Commercial Vehicles are older than 15 years without valid fitness certificates, according to the data.

The fitness centres will have tracks and equipment suitable to test the various fitness criteria like emission norms, braking and other parameters, without resorting to any human intervention. The ministry has requested states to consider providing land for free for these centres. Market demand will drive the number and concentration of fitness centres in an urban area. For example, a city like Delhi with a huge vehicle fleet may, typically, have more fitness centres than a city with much less population of cars. But the government wants at least 718, or one in each district.

The Centre is promoting a model Inspection and Certification centre worth Rs 17 crore in all states. It has sanctioned 26 such model centres. The centre does not want these facilities too far from city centres, so that vehicle owners do not have to travel great distances to get testing done.

As for the scrapping centres, the Ministry of Road Transport and Highways on Thursday came up with draft notification on how these scrapping centres will be operated. Vehicle scrapping centres are not exactly new in India. Notably, MMRPL, a joint venture between Mahindra and state-owned MSTC Limited is one of the first auto scrapping centres in India, operating out of Greater Noida.

Known as Registered Vehicle Scrapping Facility (RVSF), the facilities under the new policy are to be set up by any legal entity, as long as they follow the relevant health, safety and labour laws, and applicable environmental laws.

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They will be linked to the government’s vehicle database called VAHAN. To see to it that stolen vehicles are not passed off for scrapping, or the vehicle concerned is not involved in any criminal activity, the centres will also have access to databases of local police and the National Crime Records Bureau.

The central government will develop a website for single-window clearance, on which the applicant willing to set up an RSVF will apply with documents and fee. State governments are to clear the proposals in 60 days. The processing fee is Rs 1 lakh and a bank guarantee of Rs 10 lakh as Earnest Money Deposit will have to be lodged with the authority as a security deposit for the initial authorization period of 90 days. The license to operate a scrapping centre will be valid for 10 years renewable for another 10.

The RVSF, after verifying the original documents from the owner/representative and records of the vehicles, will issue the ‘Certificate of Deposit’, which can be used to avail incentives and benefits for purchase of a new vehicle. The government says that the scrapping centre will have to keep safe custody of “cut piece of Chassis Number for a period of 6 months from the date of issue of ‘Certificate of Vehicle Scrapping’” and maintain a copy of all documents for record and examination during audit.