Prime Minister, Narendra Modi has announced the vehicle scrappage policy at the Investor Summit in Gujarat. The policy is aimed at easing the process of phasing out old, unfit, and polluting vehicles in an environment-friendly manner. Currently, vintage vehicles are exempted from the scrappage policy and a separate policy will be formed soon.

The policy aims at making the Indian scrappage industry organised, transparent, and environment-friendly. Irrespective of the vehicle age, the policy targets voluntary scrapping of around one crore unfit vehicles in the country. Currently, the registration of the vehicles is linked to the validity of the fitness certificate. Commercial Vehicles (CVs) are required to undergo a fitness test every two years for the first eight years and annually thereafter. As for Private Vehicles (PVs), the registration is valid for 15 years and renewal is valid for five years.

All vehicles have to undergo a fitness test post the expiry of the registration certificate. Effective from 1 April, 2023, it will be mandatory for Heavy Commercial Vehicles to undergo fitness testing via automated testing stations only. As for all the other classes of Commercial Vehicles and Passenger Vehicles, fitness testing via automated testing station is proposed to be mandated in a phased manner from 1 June, 2024.

The fitness certificate will not be issued to vehicles that fail the test. However, one re-test will be allowed after the necessary repair/rectification and re-inspection will be required if ordered by the Appellate authority, failing which the vehicle will be identified as end-of-life vehicle (ELV) and will be eligible for scrapping.

Post the scrapping of old and unfit vehicles, a certificate of deposit will be issued along with the scrap value for the old vehicle by the scrapping centre, which will be approximately 4-6 per cent of the ex-showroom price of the new vehicle. Based on this, the individual can gain benefits in the form of exemption in the registration cost of a new vehicle, along with a rebate of up to 25 per cent in the road tax for non-transport vehicles and up to 15 per cent for transport vehicles. Additionally, auto manufacturers have been advised to provide a five per cent discount on purchase of a new vehicle against the certificate of deposit.

It is worth noting that the rules for fitness tests and scrapping centres are likely to be notified by 1 October, 2021. To prevent longer use of old vehicles, the disincentives come in the form of increased fees for fitness tests and issuance of fitness certificates for commercial vehicles which are older than 15 years. Moreover, the re-registration fee has also been increased for private vehicles which are older than 15 years.

The revised fee structure for conducting fitness test and granting fitness certificate is as follows -

Conducting test of a vehicle for grant or renewal of fitness certificate (for vehicles older than 15 years)

Light Motor vehicle

-Rs 600 (existing fees)

- Rs 1,000 (automated testing) (revised fees)

Medium Goods/Passenger vehicle

-Rs 1,000 (existing fees)

- Rs 1,300 (automated testing) (revised fees)

Heavy Goods/Passenger vehicle

-Rs 1,000 (existing fees)

- Rs 1,500 (automated testing) (revised fees)

Grant or renewal of fitness certificate (for vehicles older than 15 years)

Light Motor vehicle

-Rs 200 (existing fees)

- Rs 7,500 (revised fees)

Medium Goods/Passenger vehicle

-Rs 200 (existing fees)

- Rs 10,000(revised fees)

Heavy Goods/Passenger vehicle

-Rs 200 (existing fees)

- Rs 12,500 (revised fees)

Revised fees for re-registration, fitness test, and fitness certificate of Light Motor Vehicle (LMV) non-transport

Issue or renewal of certificate of registration charges

- Rs 600 (currently for new registration and renewal of registration)

- Rs 600 (revised fees for new registration) and Rs 5,000 (revised fees renewal of registration after 15 years)

Conducting test of a vehicle for grant or renewal of fitness certificate (for vehicles older than 15 years) – Rs 1,000 (automated testing)

- Rs 600 (existing fees)

- Rs 1,000 (revised fees) (automated testing)