END OF LIFE VEHICLE SCRAPPAGE : EVERYTHING A VEHICLE OWNER NEEDS TO UNDERSTAND

The government has announced new regulations for the scrapping of end-of-life vehicles, which will take effect on April 1, 2025. These vehicles are those that are no longer validly registered or self-declared as waste due to certain conditions, among other factors.

The Environment Protection (End-of-Life Vehicles) Rules, 2025, outline the responsibilities of all involved parties. Producers will need to register with the Central Board through a newly created centralized online portal, and their registration application must follow the format specified in the rules' Schedule. In addition, they are required to meet Extended Producer Responsibility (EPR) obligations and submit annual reports. EPR refers to a producer's duty to ensure the environmentally sound scrapping of end-of-life vehicles.

Owners of registered vehicles must ensure that their vehicles are tested according to the relevant regulations. Furthermore, individuals are not permitted to keep an end-of-life vehicle for more than 180 days. Such vehicles must be submitted at any designated sales outlet, collection centre, or registered scrapping facility of the producer.

India's Vehicle Scrappage Policy took effect in April 2022. The objective of the government-funded programme is to phase out old passenger and commercial vehicles and thereby reduce urban air pollution, increase passenger and road safety, and stimulate vehicle sales.

The main objectives of the policy are:

• Reduce pollution by scrapping unfit vehicles.
• Enhance vehicle, passenger, and road safety.
• Formalise the vehicle scrappage industry.
• Generate employment in the automobile industry.
• Improve the fuel efficiency and reduce the maintenance cost of a vehicle.
• Make low-cost raw materials available for the automobile, steel, and electronic industries.

To ensure effective implementation of these rules, a committee may be constituted by the Central Government.

RTO RULES FOR SCRAPPING AN OLD CAR

• You must write a letter to the RTO (Regional Transport Office) office about scrapping the vehicle.
• You must submit an affidavit stating that the vehicle was not involved in the act of theft. Additionally, you must also declare that there are no bank loans, insurance claims, traffic penalties, or court cases against the vehicle.
• You must also submit the vehicle’s original documents and the number plate that was cut out from the vehicle during the scrapping process.
• The scrapping centre must provide you with a confirmation letter on their letterhead and photographs of the scrapped vehicle to submit at the RTO office.
• If all the above documents are satisfactory, the RTO authorities will deregister your vehicle.

India's Vehicle Scrappage Policy, introduced in 2021 and progressively implemented through 2025, aims to phase out old, unfit, and polluting vehicles to promote environmental sustainability, enhance road safety, and stimulate the automotive sector.

Key Components of the Policy

Applicability and Mandatory Fitness Tests:

- Commercial Vehicles: These vehicles must undergo mandatory fitness tests 15 years after their registration date. If they fail the test, they will be deregistered and classified as End-of-Life Vehicles (ELV). Owners may choose to repair and retest the vehicle, but if the vehicle fails multiple times, it must be scrapped.

- Private Vehicles: Mandatory fitness tests are required for private vehicles after 20 years from the registration date. Vehicles that pass will be eligible for re-registration but will have to meet stricter regulations and pay higher registration fees and taxes. Vehicles that fail the test will be deregistered and must be scrapped.

Incentives for Vehicle Owners:

- Scrap Value: Owners can receive a scrap value equivalent to around 4-6% of the ex-showroom price of a new vehicle when they scrap their old vehicle.

- Manufacturer Discounts: Vehicle manufacturers are encouraged to provide a 5% discount on the purchase of a new vehicle upon presenting a scrappage certificate.

- Road Tax Concessions: State governments are urged to offer motor vehicle tax concessions of up to 25% for non-transport vehicles and up to 15% for transport vehicles when acquiring a new vehicle with a scrappage certificate.

- Registration Fee Waiver: The registration fee for any new vehicle purchased with a scrappage certificate will be waived.

Disincentives for Retaining Old Vehicles:

- Increased Fees: Significant hikes in registration and fitness certificate renewal fees for vehicles older than 15 years.

- Green Tax: An additional green tax will be levied on older vehicles, with variability based on state and vehicle type, to deter the use of high-polluting vehicles.

Establishment of Infrastructure:

- Automated Fitness Centres: The policy requires the creation of Automated Fitness Centres nationwide to ensure fitness tests are conducted transparently and efficiently.

- Registered Vehicle Scrapping Facilities (RVSF): Development of RVSFs will be promoted to guarantee environmentally sustainable and technologically advanced scrapping practices.

Environmental and Economic Benefits:

- Pollution Reduction: The discontinuation of unfit vehicles is expected to markedly reduce vehicle emissions, leading to better air quality.

- Resource Efficiency: Recycling materials from scrapped vehicles will provide valuable raw materials for various industries, decreasing reliance on new resources and supporting a circular economy.

- Economic Growth: The policy is projected to enhance demand for new vehicles, drive investment in the automotive and recycling sectors, and generate job opportunities.

FAQ

What Should I Do Once My Car Reaches 15 Years of Age?

According to Indian regulations, the registration certificate for a car is valid for 15 years, after which it must be renewed every five years. If your vehicle is nearing the 15-year mark, it's time to initiate the renewal process for its registration certificate. Be sure to apply for the renewal before the certificate expires.

What Incentives Are Available for Vehicle Owners Who Scrap Old Vehicles and Buy New Ones?

If you're wondering what you can gain from scrapping your car, here are some available discounts and incentives:

- Scrap Value Discount: You can receive a discount based on the vehicle's scrap value, typically around 4-6% of the ex-showroom price of a new car.

- No Registration Fees: Presenting your scrapping certificate allows you to waive the registration fee for your new vehicle.

- Discounts on New Purchases: The government encourages vehicle manufacturers to offer an additional 5% discount to customers upon showing their scrapping certificate, in addition to the scrap value discount.

- Reduced Road Tax: The state government may extend concessions on road tax for your new car, possibly as much as 25% for private vehicles and up to 15% for commercial ones.

When is It Time to Scrap an Old Car?

Old and unfit vehicles that emit excessive pollutants significantly contribute to carbon emissions. To regulate the disposal of such vehicles, the Vehicle Scrappage Policy outlines the following eligibility criteria for scrapping:

- Both commercial and non-commercial vehicles must pass a fitness test to renew their registration.

- Should a vehicle fail this test, the owner can make repairs and retest.

- If the vehicle fails to pass thereafter, it will be classified as an End-of-Life Vehicle (ELV) and can be scrapped.

- If you wish to keep the vehicle, you should visit an authorized Automated Testing Station.

- For scrapping, visit an authorized scrapping facility.

How Does Scrapping Your Vehicle Impact Its Insurance?

As explained earlier, scrapping a vehicle results in the cancellation of its registration certificate. It is also crucial to notify your car insurance provider about the scrapping. When a vehicle is deregistered, the insurance policy associated with it is annulled to prevent potential misuse of existing vehicle information.

Here's how the cancellation of your insurance policy for a scrapped vehicle affects you:

- Once your insurance policy is cancelled, you are no longer required to pay premiums.

- If you are owed a refund for premiums paid before the scrapping, it will be calculated on a pro-rata basis.

- If you file a claim on your insurance policy this year before scrapping, the policy will only be cancelled next year.

- If no claim has been made on the policy, you can transfer the No Claim Bonus (NCB) to your new car, as the NCB is assigned to the policyholder rather than the vehicle. You can request a No Claim Bonus certificate for your old car, which can be used for a discount on your new car's insurance.

When purchasing a new vehicle, you'll need to obtain a new insurance policy. You can also compare car insurance options online to secure a plan that offers the best coverage at a competitive price.

It’s vital to cancel the Registration Certificate (RC) of the scrapped car to prevent criminals from using it for car theft or other illegal activities.

Valuation of Old Cars

If your car is in non-functional condition, you’ll likely receive a price based on the weight of its metal parts, which averages around Rs.15 per kilogram. However, if the car is still operational, a scrap dealer may choose to sell its spare parts. In this case, only the metallic body will be scrapped, and since the dealer can make a significant profit from selling spare parts, you might be able to negotiate a higher lump sum amount during the scrapping process.

The Vehicle Scrappage Policy serves as a comprehensive initiative to modernize India's vehicle fleet while fostering environmental sustainability and boosting economic growth. By incentivizing the retirement of older, polluting vehicles, the policy aims to reduce emissions and enhance air quality. It also encourages the adoption of newer, more efficient vehicles, which can improve energy efficiency and reduce maintenance costs. Furthermore, the initiative presents significant opportunities for job creation and innovation within the automotive sector, ultimately contributing to a more sustainable and economically vibrant future for the country.