Discounts for scrapping old vehicles

Auto manufacturers are now offering discounts on new commercial and passenger vehicles when customers provide a scrappage certificate for old vehicles. This replaces the previous vehicle exchange discount offered by car dealers.

What is the Voluntary Vehicle-Fleet Modernization Program (V-VMP)?

1. The V-VMP, also known as the Vehicle Scrapping Policy 2021, aims to phase out old and unfit vehicles. Vehicles over 20 years old for private use and over 15 years old for commercial use are no longer eligible for re-registration.
2. Recent Developments:
   1. Discounts: Automakers offer discounts of 1.5% to 3%, or up to Rs 25,000, on new vehicles when an old vehicle is scrapped. Discounts are available for 2 years for commercial vehicles and one year for passenger vehicles.
   2. State Discounts: Several states are providing 25-30% discounts on road tax for recycled vehicles.

Categorisation of Vehicles for Scrappage Policy:

1. Private Vehicles: Must pass a fitness test after 15 years of registration; if successful, registration renewal is valid for 5 years.
2. Commercial Vehicles: Subject to fitness tests every two years for the first 8 years and annually thereafter, up to 15 years.
3. Government Vehicles: All government vehicles over 15 years old will be scrapped.
4. Vintage Vehicles: Exempt from scrappage policy due to their maintenance and limited usage.

Benefits of V-VMP:

1. Pollution Reduction: Scrapping 1 crore unfit vehicles will cut emissions by 15-20%.
2. Formalisation: Aims to organize and make the scrappage industry transparent and eco-friendly.
3. New Vehicle Demand: Increases demand for new, technologically advanced vehicles.
4. Vehicular Safety: Enhances Road and vehicle safety with newer, safer vehicles.
5. Circular Economy: Promotes recycling, job creation in the sector, and improvements in waste management R&D.
6. Fuel Efficiency: Upgrades vehicles to meet BS VI standards, reducing NOx emissions by 25%.

Incentives and Disincentives Under V-VMP:

1. Incentives:
   1. Discounts on New Vehicles: A scrap value of 4-6% of the new vehicle's ex-showroom price, with a government advisory for a 5% discount on new purchases.
   2. Motor Vehicle Tax Concessions: Up to 25% for non-transport and 15% for transport vehicles.
   3. Waived Registration Fees: For new vehicle purchases.
2. Disincentives:
   1. High Fees: Increased charges for fitness tests and registration renewals for older vehicles.
   2. Green Cess: A 10-15% green cess on old vehicles in addition to road tax.

What is Circular Economy?

1. Definition: A system where materials are continually reused, refurbished, remanufactured, and recycled to minimize waste and keep resources in circulation.
2. Benefits: Addresses climate change, biodiversity loss, and pollution by reducing reliance on finite resources.
3. Principles:
   1. Eliminate waste and pollution
   2. Circulate products and materials at their highest value
   3. Regenerate nature

India’s Initiatives to Promote Circular Economy:

1. Battery Waste Management Rules, 2022
2. Plastic Waste Management (Amendment) Rules, 2022
3. E-waste Management Rules, 2022
4. Extended Producer Responsibility (EPR) Certificates

Conclusion

The Vehicle Scrapping Policy 2021 plays a crucial role in reducing vehicular pollution and advancing sustainability. By incentivizing the scrapping of old vehicles, it supports the transition to newer, more efficient models, aligns with circular economy principles, and contributes to both environmental preservation and economic growth.

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