Planning to junk your 20-year-old car? This is the right time — Here's why

Are you planning to junk your 20-year-old vehicle and buy a new one? This might be the right time as the Centre on Thursday announced incentives for those scrapping their old private vehicles and buying a new one.

As per the Voluntary Vehicle-Fleet Modernisation Programme, the government is offering incentives to encourage owners of old vehicles to junk them. Under the policy, the owner who junks their old vehicle through registered scrapping centres would get a scrapping certificate. The owner can later use this certificate to get incentives while buying a new vehicle.

Meanwhile, to discourage the public from using old and polluting vehicles, the Union Ministry of Road Transport and Highways has proposed a plan to de-register 15-year-old commercial vehicles and 20-year-old private vehicles if they failed to get a fresh fitness certificate. Even if such vehicles get fitness certificates, they will have to pay a hefty amount for re-registration.

Also read — Own a 15-year old vehicle? Here's how the new scrappage policy may affect you

Announcing the details of the policy, Union Road Transport Minister Nitin Gadkari on Thursday said in Lok Sabha that some of these incentives include scrap value for the old vehicle given by the scrapping centre, which is approximately four to six per cent of the ex-showroom price of a new vehicle, a road tax rebate of up to 25 per cent for personal vehicles and up to 15 per cent for commercial vehicle and up to 5 per cent discount on the purchase of new vehicle against the scrapping certificate. The ministry has also proposed to request states to waive the registration fee on the purchase of a new vehicle against the scrapping certificate.

Gadkari further clarified that the policy won't be applicable for vintage cars.

Union Finance Minister Nirmala Sitharaman first announced the policy in the Union Budget- 2021-22.

Also read — Union Budget 2021 | FM Nirmala Sitharaman announces voluntary scrapping policy to phase out old vehicles

The ministry proposed that all vehicles of the central government, state government, municipal corporation, panchayats, state transport undertakings, public sector undertakings and autonomous bodies with the Union and State Governments may be de-registered and scrapped after 15 years from the date of registration.

The minister expects that over 100 registered vehicle scrapping centres across the country will come up over the years by private investors. Besides, automated fitness testing centres will be set up to test vehicles who have completed 15 years for commercial vehicles while 20 years for private vehicles. The automated testing centres would check vehicle fitness without manual intervention. This would attract an investment of around Rs10,000 crore and create as many as 50,000 jobs, he added.

Setting the timelines for implementing the scrapping policy, Gadkari said, the scrapping of 15-year-old government vehicles will start from April 1, 2022. Mandatory fitness testing of heavy vehicles would start from April 1, 2023, while for other vehicles in a phased manner from June 1, 2024, and the rules for fitness tests and scrapping centres will be issued on October 1, 2021.

According to the minister, India has 51 lakh light-motor vehicles that are older than 20 years and 34 lakh light-motor vehicles that are older than 15 years. Around 17 lakh medium and heavy commercial vehicles are older than 15 years without valid fitness certificate.