Launch of the new Vehicle Scrappage Policy

by mehekkaoberoi


  • Prime Minister Narendra Modi unveiled the National Automobile Scrappage Policy on Friday, 13th of August while virtually addressing the Gujarat Investor Summit, labeling it a “major step towards Atma Nirbhar Bharat.”
  • Union finance minister Nirmala Sitharaman had originally revealed about the launch of this policy in her Budget speech in February this year.
  • Automobile manufacturers such as Maruti Suzuki, Toyota, and Mahindra and Mahindra have already declared plans to invest in vehicle dismantle centres across the country.


  • The vehicle scrappage scheme is expected to generate demand for new vehicles, especially commercial vehicles.
  • Automobile companies, the Central and state governments will work together to create a unique ecosystem that includes fitness centres and junk yards to assess the condition of vehicles and ultimately scrap them. 
  • In the coming years, the government expects both auto scrap yards and fitness centres to become sources of employment for local people.
  • By this policy the government is aiming to phase out old unfit vehicles and replace them with modern automobiles and create a circular economy to reduce the burden of travel and transportation.
  • Asia’s largest ship recycling and scrapping yard Alang in Gujarat would become a hub for old vehicle scrapping and significant amounts of materials from the scrappage can be recycled for its use in multiple industries.

Сurrent  Sсenаriо:-

  • Commercial vehicles older than 15 years and passenger vehicles older than 20 years will be required to be scrapped if they don’t pass fitness and emission tests, according to the new regulation.
  • After 15 years of use, government departments will be required to mandatorily surrender their four wheeler vehicles.
  • In the absence of a “fitness certificate,” registration of older vehicles will be cancelled automatically.
  • A road tax rebate of up to 25% for new personal vehicles and 15% for new commercial vehicles, as well as a 5% reduction against the scrapping certificate, have also been proposed as part of the strategy.
  • Customers who discard older vehicles will be given some incentives by  both the government and automakers, according to the scheme upon purchasing new vehicles.


  • The new legislation, according to car industry executives, will encourage fleet owners to discard their outdated trucks and small commercial vehicles which will in turn help boost the sales and economy of the automobile industry.
  • This measure is aimed to greatly benefit the middle class. When older cars are scrapped, a certificate will be granted which will ensure that these people get a discount on buying new cars and benefit on taxes.
  • Vehicle scrapping policy strives to reduce pollution by phasing out unfit and polluting vehicles in an environmentally sustainable manner and aims to create a cleaner and pollution free space.
  • According to Union Transport Minister Nitin Gadkari, the initiative will bring in investments worth more than 10,000 crore and create up to 50,000 employment opportunities.

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