What Is the Vehicle Scrappage Policy in India?
The Vehicle Scrappage Policy was officially notified by the Ministry of Road Transport and Highways (MoRTH) in September 2021 with a clear national objective:
👉 To phase out old, unsafe, and polluting vehicles from Indian roads and replace them with safer, cleaner, and technologically advanced vehicles.
Rather than forcing blanket bans, the policy introduces a fitness-based framework, where vehicles that fail mandatory fitness tests are classified as End-of-Life Vehicles (ELVs) and must be scrapped through an authorised vehicle scrappage facility such as Carbasket.
Why Was the Vehicle Scrappage Policy Introduced?
India has one of the largest aging vehicle populations in the world. Older vehicles:
- Emit 10–15 times more pollutants
- Lack modern safety features
- Consume more fuel
- Increase road accident risks
- Burden urban infrastructure
The scrappage policy aims to:
- Reduce air pollution
- Improve road safety
- Boost the automobile and recycling industry
- Promote a circular economy
- Lower oil imports and emissions
Vehicle Age Limits Under the Scrappage Policy
As per MoRTH guidelines:
Vehicle Type Age Limit Rule
Commercial Vehicles >15 years Mandatory fitness test
Passenger / Private Vehicles >20 years Mandatory fitness test
Government Vehicles >15 years Mandatory scrapping
📌 Age alone does NOT ban a vehicle.
📌 Fitness failure triggers scrapping.
What Is a Fitness Test Under the Scrappage Policy?
Once a vehicle crosses the prescribed age:
- It must undergo Automated Fitness Testing
- Tests include:
- Emission levels
- Brake efficiency
- Steering & suspension
- Structural integrity
- Safety compliance
Fitness Test Outcomes
- Pass: Vehicle can continue on road (with higher fees)
- Fail: Vehicle becomes an End-of-Life Vehicle (ELV)
What Is an End-of-Life Vehicle (ELV)?
A vehicle is declared ELV if:
- It fails mandatory fitness test
- It is unsafe or beyond repair
- It is voluntarily scrapped by owner
- It is severely damaged (fire, flood, accident)
🚫 ELVs cannot be re-registered, sold, or driven
They must be scrapped through an facility at Carbasket.
Mandatory Scrapping Process for ELVs
Once declared ELV:
- Vehicle handed over to authorised scrapper
- Chassis number destroyed
- Environment-safe dismantling
- RC deregistered in VAHAN
- Scrapping Certificate / Certificate of Deposit (CD) issued
📌 This certificate is legally required for incentives.
Incentives Under the Vehicle Scrappage Policy
The policy encourages voluntary scrapping through financial and regulatory incentives.
Key Incentives Include
🔹 1. Scrap Value
- Market-linked value of scrap material
- Typically 4–6% of ex-showroom price
🔹 2. Certificate of Deposit (CD) Benefits
- Issued after scrapping
- Used for purchasing new vehicle
🔹 3. Road Tax Concession
- Up to 25% for private vehicles
- Up to 15% for commercial vehicles (state-dependent)
🔹 4. Registration Fee Waiver
- Complete or partial waiver for new vehicle
🔹 5. Manufacturer Discounts
- OEMs may offer additional discounts against CD
🗺️ State-Wise Vehicle Scrappage Incentive Table - India (2025)
State / UT Road-Tax Rebate (Private) Commercial Incentive Notes / Additional Benefits
Haryana 10 % of scrap value (whichever lower) 15 % rebate Incentives on new vehicle when scrapped; compulsory CoD.
Uttarakhand 25 % or ₹50,000 (whichever lower) ~15 % rebate Rebate applicable when claiming CoD.
Karnataka Fixed rebate ₹20,000 (vehicles >₹20 L) ~15 % Fixed road tax rebate depending on new vehicle cost. Puducherry 25 % or ₹11,000 (whichever lower) ~15 % Incentives carry ceilings; CoD must be produced.
Maharashtra ~15 % rebate ~15 % rebate State tax concession announced for voluntary scrapping with RVSF cert. The Times of India
Uttar Pradesh ~15 % rebate ~10 % rebate As reported for new vehicle purch ases against scrapped one. The Times of India
Bihar ~25 % rebate ~15 % rebate Follows national pattern of scrappage benefit. Business Standard
Madhya Pradesh Up to 50 % exemption in motor vehicle tax Up to 50 % New vehicle tax exemption if old car scrapped with CoD (policy 2025). The Times of India
Gujarat ~25 % rebate ~15 % rebate Drives scrapping benefits under state notifications. Business Standard
Punjab ~25 % rebate ~15 % rebate Tax rebate follows general state incentive. Business Standard
Kerala ~25 % rebate ~15 % rebate Incentives on road tax when scrapped vehicle used for new registration. Business Standard
Odisha ~25 % rebate ~15 % rebate Rebate and waiver of pending liabilities in some cases. The Times of India
Assam ~25 % rebate ~15 % rebate Road tax rebates; waiver on pending liabilities for old vehicles scrapped. The Times of India
Chandigarh (UT) ~25 % (private); ~15 % (transport)Same Rebate via CoD, though implementation uptake has been slow. The Times of India
Meghalaya Up to 25 % rebate ~15 % rebate Accepts vehicles from any state for scrapping with tax rebate. Carbike360
Other States / UTs Typically up to ~25 % ~15 % National guideline + state notifications; varies on implementation & caps. The Times of India
📌 Notes on State Incentives
✅ These road tax rebates are offered when you produce the Certificate of Deposit (CoD) from a Registered Vehicle Scrapping Facility (RVSF). Influenced by MoRTH’s national guideline recommending up to 25 % rebate on personal vehicles and 15 % on commercial. Press Information Bureau
✅ Some states (like Madhya Pradesh) have gone further with 50 % exemptions in motor vehicle tax for new registrations against scrapped old vehicles. The Times of India
✅ Incentive structures can vary across states - some place a cap amount, offer rebate or fixed ₹ value Average: 20,000/- (whichever is lower), or provide waivers on pending liabilities.
Dis-Incentives for Continuing Old Vehicles
To discourage prolonged use of old vehicles, the policy introduces penalties.
⚠️ Dis-Incentives Include
- Increased fitness test fees
- Higher registration renewal charges
- Green tax imposed by states
- Denial of fitness renewal if failed
- Restricted movement in cities
- Insurance premium increase
📌 Continuing an unfit vehicle becomes economically unviable.
Is Scrapping Mandatory for All Old Vehicles?
❌ No.
Mandatory only when:
- Vehicle fails fitness test
- Government vehicles cross age limit
✔️ Voluntary scrapping allowed at any age
Role of Carbasket Under the Scrappage Policy
Carbasket operates as a compliant vehicle scrappage partner, ensuring:
- MoRTH & VAHAN-aligned process
- Legal RC cancellation
- Digital scrapping certificate
- Environment-safe dismantling
- PAN-India service
- Zero paperwork stress for owners
Carbasket ensures that scrapping is:
✔️ Legal
✔️ Traceable
✔️ Pollution-free
✔️ Fully documented
Environmental Impact of the Policy
- Reduction in PM2.5 & NOx emissions
- Better fuel efficiency fleet
- Safer roads
- Responsible recycling of steel, aluminium, plastics
- Promotion of green jobs
Vehicle Scrappage Policy & Circular Economy
The policy transforms old vehicles into:
- Reusable metals
- Recycled plastics
- Energy-efficient raw materials
This supports:
- Domestic manufacturing
- Reduced mining dependency
- Sustainable mobility goals
Frequently Asked Questions (FAQs)
What is the Vehicle Scrappage Policy in India?
It is a MoRTH policy notified in Sept 2021 to phase out unfit, old vehicles via fitness testing and regulated scrapping.
Is vehicle scrapping compulsory after 15 years?
No. Only if a vehicle fails the fitness test.
What happens if my vehicle fails the fitness test?
It becomes an End-of-Life Vehicle and must be scrapped legally.
Who issues the scrapping certificate?
Yes. Carbasket.
Can I scrap my vehicle voluntarily?
Yes, at any age.
What incentives do I get for scrapping?
Scrap value, tax rebate, registration fee waiver, OEM discounts.
Is Carbasket authorised under the scrappage policy?
Yes. Carbasket follows MoRTH and VAHAN-aligned procedures.
Conclusion: A Shift Towards Cleaner & Safer Roads
The Vehicle Scrappage Policy (2021) is not just a regulation—it is a national transition strategy.
By linking vehicle life to fitness and safety, and rewarding responsible scrapping, India is paving the way for:
- Cleaner air
- Safer roads
- Smarter mobility
♻️ Carbasket is proud to support this transition by making vehicle scrapping legal, transparent, and sustainable.
