In this column, you’ll find out details on the Government’s new Vehicle Scrapping Policy, the subsidy that you can avail of, RTO rules, etc.
The Government of India was working towards drafting the vehicle scrapping policy for India to promote electric vehicles.
Promoting e-vehicles will benefit India in many ways by reducing the dependency on crude oil imports, reducing carbon emissions, and overall push for the auto sector to increase its sale.
Many developed countries have already introduced a vehicle scrapping policy and implemented green solutions for reducing carbon emissions, India being the fastest developing nation needed a vehicle scrapping policy of its own.
Shri Nitin Gadkari, Road Transport & Highways Minister recently announced the Vehicle scrapping policy of India, which focuses more on proving people incentives to buy a new car and scrape out the old ones.
The policy also imposes penalty charges on old vehicles for re-registration of the vehicle which demotivates the vehicle owners in maintaining their old cars.
When you couple the vehicle scrapping policy and electric vehicle subsidy, an individual buying a car get high incentives when he purchases a new Electric car.
In some states like Maharashtra, you can get a combined subsidy of Rs.4-5 lakhs subsidy for buying e vehicle along with scrapping your old car.
Table of Contents
What is a Scrap Car?
A scrap car is a car that is no longer deemed fit to drive by the law. It has nothing to do with the functionality of the car meaning if a car runs well but is older than 15 years (like in Delhi) then also the vehicle will be considered as a scrap car.
Different states have different policies for considering the vehicle as scrap in Karnataka any vehicle that does not function is considered a scrap car instead of the age limit.
You can still apply for re-registration of the vehicle but, the new vehicle scrapping policy has increased the charges as a demotivating factor for re-registration of the vehicle.
Benefits of Vehicle Scrapping Policy in India
The following are the benefits of the Vehicle Scrapping Policy in India-
- The biggest benefit of the new Vehicle Scrapping Policy is a cleaner environment because of the removal of inefficient old vehicles from roads.
- Increased auto sales hence improving Auto Industry and Indian Economy
- When the Vehicle Scrapping Policy is coupled with E-Vehicle Subsidies, the carbon emission by India will be reduced significantly
- The increasing international crude oil prices and dependency on oil-rich countries can be reduced also, the import of crude oil can be reduced which improves the Indian economy further
- An individual gets high incentives for scrapping his/her vehicle from an authorized scrapper
- With old vehicles removed from Indian Roads, driving will be much safer due to the latest technology and increased safety features.
- 5% discount on the purchase of new vehicle in exchange for old car
Penalties on Old Cars
To motivate the citizens in adopting new vehicles, the Government of India has imposed high penalizing charges on old vehicles. The following are the high charges different services for a vehicle older than 15 years-
- Increase re-registration fee or vehicles older than 15 years-
- Two-wheeler re-registration will cost Rs.1000/- earlier it was Rs.300/-
- Fitness certificate registration for old vehicle is Rs.500/- earlier it was Rs.100/-
- For four-wheeler re-registration will cost Rs.5000/- earlier it was Rs.600/-
- For the Heavey goods segment re-registration has increased from Rs.1500/- to Rs.10,000/- and for medium good vehicles Rs.1000/- to Rs.10,000/- as well
- For imported two or three-wheelers, the charges have increased from Rs.2500/- to Rs.10,000/-
Note-All these higher charges will be implemented from 1st April 2022
RTO rules of selling of car as scrap in India
The following are the rules the new vehicle scrapping policy has-
- After scrapping, you have to write a letter to the RTO stating intent to scrap the vehicle
- You also have to submit your RC and Chassis cut out to the RTO
- You also have to submit an affidavit stating that the vehicle is not under any loans, insurance claims, or pending legal or criminal cases
- You also have to notify the insurance company of the same
- RTO will verify the documents and check for any pending records from the database of the National Crime Records Bureau. A No-objection certificate will be provided by the Bureau and the de-registration of the vehicle will be done.
- Commercial Vehicles that are more than 15 years old and Private vehicles older than 20 years old must go through mandatory fitness and emission test. If failed, then the scrapping of the vehicle will be necessary. If passed then the vehicle can be re-registered for few more years
How can I scrap my car and avail subsidy in return?
The entire process of scrapping your car is explained below-
- To scrap your old car, the car owner has to visit the nearest government authorized vehicle scrapper
- After reaching the vehicle scrapper, they will evaluate your car based on the different factors
- You can negotiate the price of the scrappage and resale of the auto parts from your car
- After negotiating, you will be provided with the car chassis metal cutout from your car which you have to keep safe
- Now, your vehicle will be sent to the scrapping after working parts were taken out for reselling
- After the scrapping process is done, you’ll be provided with the “Certificate of Destruction” along with the negotiated payment
- Now, you have to reach the RTO department and write a letter stating your intent to scrap your old vehicle
- You have to submit the vehicle chassis number along with your scrapped Card RC, you also have to provide a photocopy of the “certificate of destruction”
- This will ensure, your old number and RC get de-registered from the RTO database
- Also, make sure you are taking few photographs as proof of destruction to ensure the vehicle will not be used illegally
Valuation of the Old Car for Scrapping
The valuation of the old car for scrapping is as follows-
- If the old car is in working condition, then you can expect more money from the scrapper. You can negotiate with the scrapper and demand more for the parts that can be reused
- In that case, the frame of the vehicle will be scrapped and for the frame, you will be paid at the market rate of the metal frame only
- If your vehicle is not in working condition, then the entire vehicle will be scrapped and you’ll be paid at the current market rate. The current market rate as of now is Rs.15 per Kg
I’m Shiv Kumar, a graduate with a passion for finance, marketing, and technology. My journey into finance started with a desire to understand money management and investing.
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