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New scrapping policy: mandatory fitness test for vehicles, incentives for owners

Announcing the “Voluntary Vehicle-Fleet Modernisation Programme” in Lok Sabha on Thursday, Gadkari said that commercial vehicles over 15 years old and personal vehicles over 20 years old will be marked for scrapping if they fail to pass the test.

Written by Avishek G Dastidar | New Delhi |
Updated: March 19, 2021 7:33:25 am
Union Minister for Road, Transport and Highways Nitin Gadkari during a press conference on the issue of scrapping policy in New Delhi.

India will put in place a new “ecosystem” of mandatory fitness testing of vehicles, and ensure that those that fail are de-registered, according to Union Road Transport and Highways Minister Nitin Gadkari. At the same time, he said, the government will approach carmakers to consider a five per cent discount on purchase of new vehicles for those who give up their old vehicles for scrap — and push for relief in GST.

Announcing the “Voluntary Vehicle-Fleet Modernisation Programme” in Lok Sabha on Thursday, Gadkari said that commercial vehicles over 15 years old and personal vehicles over 20 years old will be marked for scrapping if they fail to pass the test. “They will be seized and destroyed,” he said.

The emphasis of the policy is on de-registration of unfit vehicles by terming them “end of life” while incentivising an enabling environment for such vehicles to be then given up for the scrapping process.

The new regulatory regime, aimed primarily at cleaner emissions, fuel efficiency and better safety, will start mandatory testing of heavy commercial vehicles from April 2023 and for other categories, in a phased manner, from June 2024.

It will kick in earlier, from April 2022, for vehicles owned by governments and allied entities like PSUs. In their case, Gadkari said, vehicles over 15 years of age will be mandatorily scrapped, without any consideration of fitness — there are at least 2.37 lakh such vehicles, he said.

Vintage cars will be exempted from this policy, Gadkari said, adding that separate guidelines will be formulated to regulate them.

“The ecosystem is expected to attract additional investments of around Rs 10,000 crore and 35,000 job opportunities,” the Minister said, adding that the new regime has been adopted after studying similar efforts in countries like Germany, UK, USA and Japan.

According to the new policy, the Government will encourage the setting up of integrated scrapping facilities — Registered Vehicle Scrapping Facility (RVSF) — across India. Officials said the locations identified include Alang in Gujarat, where a highly specialised scrapping centre is planned.

A key feature of the policy is a series of measures to nudge users towards the new system. “As a disincentive measure, increased fees for fitness certificate and fitness test may be applicable for commercial vehicles 15 year onwards from the date of initial registration,” Gadkari said.

In a draft notification issued this week, the re-registration charges of all vehicles have been proposed to be hiked from eight to around 20 times depending on the type of vehicle. These charges will kick in from October this year.

On the other hand, the Ministry will issue advisories to carmakers to give a five per cent discount on new purchases after an old vehicle has been scrapped on the basis of a certificate. Gadkari is also pushing for a rebate in GST. “I have requested the Finance Minister to give some rebate on GST of Centre and State. The decision is entirely theirs,” he said.

The Centre has also advised states to give rebates of upto 25 per cent in road tax for newly purchased vehicles along with waiver of registration charges for those who produce scrappage certificates. Officials expect that the financial incentives of scrapping and buying a new car will far outweigh the running cost of, say, a 15-year-old personal vehicle. The Government expects the scrap value to be four-six per cent of the price of a new vehicle.

Gadkari said the new rules will apply in Delhi and the National Capital Region, too, where diesel vehicles older than 10 years and petrol vehicles older than 15 are banned following a ruling in 2015 by the National Green Tribunal.


“We will take legal opinion on this matter on whether a law passed by Parliament will take precedence over the tribunal’s judgement. In my opinion, it should. There are many such instances in the past. The basis of the scrapping policy is the amendments to the Motor Vehicles Act passed by Parliament. So this policy should be applicable on Delhi also,” the Minister told reporters laters.

Gadkari said this policy is “not a penalty on anyone”. “There is some talk, like what will the poor and the middle class do (after scrapping their car). So the thing is the new cars are better equipped with safety features and provide much better mileage. So it is a benefit for all,” Gadkari told reporters. “It is not an anti-poor policy. Everybody stands to benefit from this.”

On Thursday evening, the Ministry of Road Transport and Highways issued a draft notification of rules for setting up an RVSF. Any legal entity can set up such a facility with a licence valid for 10 years and renewable for 10 more. The processing fee for applications is Rs 1 lakh each along with a bank guarantee of Rs 10 lakh. The centres will be linked to police and national databases to track stolen vehicles or those linked to other criminal activity.

Similarly, the Government plans Automated Fitness Centres to be set up through private participation. Officials said the aim is to have one every district, or at least 718 such centres across India.

The Ministry has sanctioned 26 model centres and requested states to allot land for free to encourage private investors. These automated centres, with no human intervention planned in the testing process, will charge around Rs 1,200 for testing, officials said.

According to Ministry data, 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.

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