Vehicle Scrappage Policy in India: Aim, Benefits, and Incentives

People often add value to their old car, which holds a lot of memories. Maybe it was your first car, or you bought it after completing a major milestone. However, cars or bikes older than 10 years may harm the air that we breathe. Therefore, to tackle this issue, the Government of India has introduced a new initiative: the Vehicle Scrappage Policy.

The policy dictates that cars and bikes older than 15 years must be scrapped. For this, vehicle owners also get financial incentives like discounts on new vehicle purchases. In this blog, let us understand the nitty-gritty of this policy and how it works.

Understanding the Vehicle Scrappage Policy

Launched on August 13, 2021, the Vehicle Scrappage Policy is a strategic initiative by the Government of India. The aim of this policy is to identify and remove the use of unfit and polluting vehicles from Indian roads. This initiative works on both a voluntary and mandatory basis. Therefore, its core intention is to modernise the vehicular fleet as well as help make cities less polluting.

As vehicles age, they emit greenhouse gases, which can be very polluting to the environment. Moreover, with age comes wear and tear, which can be dangerous for the driver as well as pedestrians. Therefore, with this initiative, vehicle owners can scrap their old vehicles and replace them with newer and environmentally friendly options.

Ultimately, this policy aims to reduce the country's carbon footprint and boost the availability of low-cost raw materials for the manufacturing industry.

Also Read: Credit Score and Car Insurance: The Hidden Truth for Indian Car Owners

Why was the Vehicle Scrappage Policy Introduced?

The Indian automobile sector faced a major slowdown in 2019, and the global pandemic made the situation worse. Therefore, to revive the industry, the India car scrap policy was introduced.

The primary aims of the Vehicle Scrappage Policy are:

1. Pollution Control: To reduce air pollution in India by removing older vehicles with high emission levels.

2. Economic Boost: To stimulate demand for newer vehicles and simultaneously create jobs and revenue in the automobile sector.

3. Road Safety: To ensure that Indian roads only allow vehicles which are mechanically fit and safe to drive.

4. Formalisation: To organise the current informal vehicle scrapping industry into a regulated and safe market.

Categorisation of Vehicles Under the Policy

The Vehicle Scrappage Policy does not work the same for every vehicle type or owner. Depending on the purpose of a vehicle, different rules apply. Therefore, it is important that you understand what your vehicle falls under. Let us discuss that in detail below:

Government Vehicles

The first category that the government aimed to reform was government vehicles. All vehicles belonging to the central and state government, municipal corporations, panchayats, state transport undertakings and public sector undertakings that are older than 15 years must be scrapped.

Commercial Vehicles

Commercial vehicles are those vehicles which are used for transport and business purposes. These include buses, trucks, taxis, etc. According to the Vehicle Scrappage Policy, if these vehicles are older than 15 years, then they have to undergo a fitness test. If they fail, the owners will have to take them for scrapping.

Private Vehicles

Private vehicles refer to those cars and bikes which people use for commuting. They bear a white number plate. If you own a private vehicle, then the age limit is 20 years. If your vehicle is older than 20 years, then you have to take it for a fitness test. If it fails, then the procedure is similar to the old vehicle scrap policy guidelines.

Vintage Vehicles

Vintage vehicles are treated differently. This is because the government recognises the heritage value of these cars and bikes. Usually, these vehicles are maintained and not driven regularly to avoid wear and tear. Thus, if you own such a vehicle, you do not need to follow the Vehicle Scrappage Policy.

Also Read: NOS in Cars: Meaning, Benefits, Risks, and Legal Aspects

The Vital Role of Fitness Tests

The Vehicle Scrappage Policy relies on the Fitness Test. Unlike popular belief, this scrappage policy is not only about the age of the vehicle. It is more about the health of the car or bike. Let us explore more below:

What Happens During a Fitness Test?

Here is what happens during a vehicle fitness test:

1. Emission Check: The purpose of the fitness test is to check whether your car or bike meets the Bharat Stage emission rules. Currently, BSVI (Bharat Stage 6) is the standard.

2. Safety Inspection: It also checks whether your car or bike has functional brakes, engine or structural integrity. This is important for the safety of the driver as well as other people on the road.

3. Performance: Lastly, the fitness test will check whether your vehicle is fuel-efficient for modern Indian roads.

Based on the results of this test, you either have to scrap your vehicle, repair it or renew your registration.

Benefits of the Scrappage Policy

Many people grow sentimental about their old vehicles. This is why it is hard to part with their beloved car or bike. However, there are several government and environmental benefits that come with the Vehicle Scrappage Policy. These are:

For the Environment

Newer vehicles are made taking into consideration the latest Bharat Stage VI. Therefore, when you replace older BS I or BS II vehicles with a newer model, you contribute to cutting the emission of harmful particulate matter and nitrogen oxides.

For the Economy and Industry

The government expects that the scrappage policy in India will attract new investments. Therefore, they are setting up new testing stations and scrap centres, which will create more employment. Moreover, recycling materials such as steel and plastic means India will not have to import raw materials, making manufacturing low-cost in the long run.

For the Vehicle Owner

Lastly, for vehicle owners, the benefits are 3-fold. When you invest in a new car, it means you will get better safety features such as 6 airbags and ABS. Plus, new cars are also more fuel-efficient. Moreover, you will also get financial benefits for scrapping your vehicle.

Also Read: How to Get a Fancy Registration Number for a Car and a Bike

Incentives for Scrapping Old Vehicles

As we were discussing earlier, the government has introduced several financial benefits for people who are scrapping their old cars/bikes. These aim to make owning a newer car or bike much more affordable.

Scrap Value

You have to hand over your vehicle to a registered scrapping centre. They will provide you with a scrap value, which is generally 4-6% of the ex-showroom price of a new vehicle.

Registration Fee Waiver

When you scrap your old car via the Vehicle Scrappage Policy, you will receive a Certificate of Deposit. If you show this certificate during booking your new car, you will get exclusive discounts.

Road Tax Concession

The central government has advised state governments to offer concessions on road tax for vehicles purchased after scrapping an old one. This can be up to 25% for non-transport and 15% for commercial vehicles.

Disincentives: The Cost of Keeping an Old Vehicle

The government of India discourages the use of vehicles older than 15 years as it causes pollution to the environment. However, if you still wish to drive your old car, then you have to pay excess money.

For example, the cost of re-registration and fitness testing has been increased. Moreover, if you are in a highly polluted city, officials can charge you 50% of road tax. Usually, the rate varies between 10-25% of road tax for vehicles older than 8 years.

Hiked Fees for Registration and Testing

The cost to renew your registration and get a fitness certificate has increased drastically.

Fee Structure Comparison (Private Vehicles > 15 Years)

Fee Structure Comparison (Commercial Vehicles > 15 Years)

As you can see, the cost of holding onto an old commercial vehicle has skyrocketed, making scrapping a more financially logical decision.

Impact on Two-Wheeler Owners

You may think that the vehicle scrappage policy may apply only to cars. However, this initiative is valid for motorcycles and scooters as well. India’s two-wheeler registration grew 21% in June 2026, which brings the population to 18.26 lakh units! Combined with older bikes, many of the motorcycles on the road are older than 15 years.

Therefore, if you have a bike older than 15 years, you have to get a fitness test. The bike will be checked for factors such as brakes, engine performance and emissions. If it passes, then you can extend the registration. However, if it fails, it will be declared an End of Life Vehicle, and you have to scrap it.

Older bikes also require the same amount of protection, if not more, as a brand new bike. Protect your old bikes with Bajaj General Insurance’s two-wheeler insurance today!

Also Read: New Car Insurance Guide: Everything First-Time Buyers Need to Know

Step-by-Step Guide: How to Scrap Your Car

If you want to take the benefits of the vehicle scrappage policy in India, you have to scrap your old car. Here are the steps you need to follow to get your car deregistered in India:

Step 1: Locate a Facility

Your first step is to find an Authorised Vehicle Scrapping Facility (AVSF). They are easily available online, or you can contact your local RTO for the list of registered scrappers. Try to avoid scrapping your car at an unauthorised scrapping centre, as they will not provide you with the Certificate of Deposit.

Step 2: Document Submission

After you find the centre, you need to contact them. They will ask you for specific documents that you need to submit to prove ownership. These include the original registration certificate, Aadhaar Card, cancelled cheque, PAN card and authorisation letter (if the owner is not present).

Step 3: Verification and Evaluation

Once you submit the documents to the centre, they will verify them against the VAHAN database. This ensures that your car is not stolen or blacklisted. Finally, they will evaluate the weight and condition of the car to offer you a final scrap price.

Step 4: Dismantling

The dismantling process is an environmentally controlled process. The centre will take out the tyres, batteries, and CNG kits and drain the fuel. Then they will remove the useful parts for resale or recycling. Lastly, they will crush the remaining metal shell into a bale of steel, which will be recycled.

Step 5: Certificate of Deposit

Once the vehicle is scrapped, the facility will issue a "Certificate of Deposit." This is the most important document. You will use this certificate to claim your discounts and tax waivers when you buy your new car.

Step 6: Deregistration

The scrapping facility usually helps update the VAHAN database to show that the vehicle has been scrapped. This effectively deregisters the vehicle from the RTO records, ensuring it cannot be used for illegal activities in your name.

RTO Rules for Deregistration

The Regional Transport Office plays a crucial role in the deregistration of a car. You have to provide certain documents to the RTO. These include an affidavit which states that:

1. The vehicle is not under any loan

2. There are no pending insurance claims

3. There is no pending traffic challan

4. There are no pending court cases

The RTO will verify this information with the traffic police and the National Crime Records Bureau. After verification, they will give the green signal for deregistration.

Also Read: What is RTO and DTO, and Difference Between Them?

How Scrapping Affects Your Insurance?

Before scrapping your old car, you must cancel your insurance policy. Many people wonder, ‘What will happen to my NCB when I cancel my insurance for my old car?’ Do not worry, you will be able to transfer your accumulated bonus to your new insurance policy. However, there are certain terms and conditions to this.

While buying a new car using your scrap discounts, you also have to buy a new car insurance policy. Buying a car insurance policy online has become easier with Bajaj General Insurance. Download the Bajaj General app today and get your car insured!

Final Words

For a cleaner and greener India, the Vehicle Scrappage Policy serves as a welcome initiative. This policy encourages vehicle owners to let go of vehicles that have become a burden on the environment and wallets. The cost involved in keeping an old car/bike is enormous and is not economical.

Therefore, switch to modern vehicles with updated features. Do not forget about comprehensive car insurance plans from Bajaj General Insurance, which will be tailored to your needs. Download the Bajaj General app today!

Frequently Asked Questions

Is it mandatory to scrap my car after 15 years?

No, you do not have to scrap your car if it is older than 15 years. But your car has to undergo a mandatory fitness test. If your car passes the fitness test, then you can renew your car’s registration for another 5 years.

What happens if my vehicle fails the fitness test?

If your car undergoes a fitness test and fails, then you can get your car repaired. After that, you can take your car for a retest. However, if your car fails the re-test as well, then your car will be declared as an End of Life Vehicle (ELV).

Can I scrap my car anywhere?

You must scrap your car at an Authorised Vehicle Scrapping Facility (AVSF) if you want to avail government incentives. If you choose to scrap your old car at a local and registered scrapping facility, then you will not receive the Certificate of Deposit.

Does the policy apply to diesel and petrol cars differently?

No, the Vehicle Scrappage Policy does not apply differently to petrol and diesel cars, as it is based on the age of your car. However, regions such as Delhi-NCR have a National Green Tribunal rule where petrol cars over 15 years and diesel cars over 10 years are automatically deregistered.

How do I get the discount on my new car?

You can get a discount on the purchase of your new car if you show the Certificate of Deposit during booking.

Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making any related decisions.

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