Delhi

MoRTH announces new incentive to encourage vehicle scrappage

The government is working to boost the vehicle scrapping policy, which has not seen much impact so far.

3 min read•29 Aug '24

Rivan RS

10K+ views

The Ministry of Road Transport and Highways (MoRTH) has announced new incentives to encourage owners to scrap their older vehicles. The Voluntary Vehicle-Fleet Modernisation Programme (colloquially known as the Vehicle Scrapping Policy) came into effect in 2021, but according to various industry executives, the policy has yet to have a significant impact.

New scrapping incentives include a waiver of pending liabilities
Gadkari says carmakers have agreed to offer greater discounts

When it was introduced, the policy stated that owners who scrap their vehicle (and obtain a Certificate of Deposit) could receive registration fee waivers, road tax concessions, and discounts from carmakers on purchasing a new model. It also notified state governments to offer a concession on motor vehicle tax of up to 25 percent for non-transport vehicles, and up to 15 percent for transport vehicles.

Now, the MoRTH has announced a waiver of any pending liabilities that the vehicle to be scrapped may have.

Shortly before the Ministry posted about the new incentive on X (formerly Twitter), Nitin Gadkari, the Minister of Road Transport and Highways, announced on the same platform that car and SUV brands will offer higher discounts than before upon receiving the Certificate of Deposit.

“I am pleased to report that, in response to my recommendation, several commercial and passenger vehicle manufacturers have agreed to offer discounts for the purchase of new vehicles against the scrapping of older vehicles with a valid Certificate of Deposit,” he said on X.

This development came at the recently concluded SIAM CEO’s Delegation meeting, which was chaired by Gadkari. “This initiative will significantly advance our Circular Economy efforts, ensuring that cleaner, safer, and more efficient vehicles are on our roads,” he added.

Currently, there are around 100 registered scrapping facilities across the country, with automakers including Maruti Suzuki, Tata Motors, and Mahindra establishing scrapping centres at multiple locations.

When asked for a comment, Mahindra stated, "We are committed to contributing to this important initiative and are pleased to offer attractive discounts on the purchase of new Mahindra vehicles in exchange for the scrapping of older vehicles with a valid Certificate of Deposit. This collaboration reflects our dedication to promoting sustainable mobility and enhancing road safety across the nation."

Meanwhile, Santosh Iyer, MD and CEO, Mercedes-Benz India, commented, "The vehicle scrappage policy of the Ministry of Road Transport & Highways is a step in the right direction towards creating a circular economy, at the same time boost demand for new cars having the latest technology, higher efficiency and complying with the latest safety parameters. We are completely aligned with the Ministry of Road Transport & Highways vision and Mercedes-Benz India is already offering a standard incentive of Rs. 25,000 to all new customers, who presents a Certificate of Deposit from an authorized Registered Vehicle Scrapping Facility. We believe this decision is highly consumer centric and will ultimately benefit the Indian automotive industry.”

As of this story going live, Maruti and Hyundai have yet to make a comment regarding the development.

Vehicle Scrappage Policy: weak impact

Leading industry executives feel that the government needs to do more regarding the vehicle scrappage policy. Recently, SIAM president Vinod Aggarwal said that the policy has not had much impact. He expects something from the government to give it a further push.

A few days before Gadkari's announcement, Maruti Suzuki Chairman RC Bhargava also noted at the brand's AGM that vehicle scrappage is not progressing as it should and that he expects more laws on scrappage in the coming years. “One of the reasons is the absence of the mandatory requirements of vehicle fitness. Globally, people scrap vehicles when it becomes uneconomical to bring old vehicles up to the standards required to pass the fitness norms. In India, we don't have that, and that is why this business of vehicle scrapping and the growth of most scrapping companies has been somewhat slow,” he said.