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Vehicle Scrappage Policy and its key features

The government has recently introduced a vehicle scrappage policy to phase out old and defective vehicles.

The key features of the new policy:

  • When an old vehicle is scrapped, the owner of such vehicle will receive the scrap value given by the scrapping centre, which is around 4-6 percentof the ex-showroom price of the new vehicle they buy.
  • The scheme will provide incentives to the owners of the old vehicles to scrap their unfit vehicles through registered scrapping centres, which shall provide the owners with a scrapping certificate.
  • The policy advises automobile manufacturers to provide a discount of 5 per cent on the purchase of a new vehicle against the scrapping certificate.
  • The new policy also advises offering a road-tax rebate of up to 25 per cent for personal vehicles and up to 15 per cent for commercial vehicles.
  • The new vehicle scrappage policy proposes Private Vehicles to be de-registered after 20 years if found unfit or in case of a failure to renew registration certificate. As a disincentive measure, increased re-registration fees will be applicable for private vehicles 15years onwards from the date of initial registration.
  • For commercial vehicles, the de-registration process starts after 15 years in case of failure to get the fitness certificate.
  • In addition, the registration fees may also be waived for the purchase of a new vehicle against the scrapping certificate.
  • Mandatory fitness testing of commercial vehicles is likely to start from April 1, 2023, while for personal vehicles it is expected to begin from June 1, 2024, in a phased manner.

Concept of circular economy

  • A circular economy depends on reuse, sharing, repair, refurbishment, remanufacturing and recycling of resources to create a closed-loop system, minimising the use of resources, generation of waste, pollution and carbon emissions.
  • When a car is scrapped, apart from metals including iron and steel, many other parts may emerge that can be refurbished and ploughed back into use.
  • Recycled steel from scrap, even seats and plastic parts, have value in the scrap economy. In a circular economy, products, materials, equipment and infrastructure are kept in use for longer, thus improving productivity.

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