Learn All About the Vehicle Scrappage Policy in India


07 Jun 2023

Vehicle scrappage policy is a government-funded initiative to scrap useless and old vehicles and replace them with new and modern vehicles suitable to the current needs of people and the ecosystem.

Vehicle scrappage policy is a government-funded initiative to scrap useless and old vehicles and replace them with new and modern vehicles suitable to the current needs of people and the ecosystem. The primary goal of this policy is to create an environment for scrapping the polluting & unfit vehicles that are not good for the environment. It motivates the achievement of lower carbon footprints in the country.

Nirmala Sitharaman, the Finance Minister of India, announced a new vehicle scrappage policy during the Union Budget on February 1st, 2021. Later, in March 2021, the Road and transportation minister of India, Nitin Gadkari, presented this scheme in a full-fledged manner with all its details as traffic rules. The main objective of this scheme was to phase out vehicles older than 15 years. It will also provide a much-needed boost to the automotive sector of India.

How will this policy be implemented?

The vehicle scrappage policy aims to identify the vehicles not fit to be driven on the roads. As per motor vehicle laws, a vehicle should only be used for 15 years. After a defined period, a vehicle becomes unfit for use since it produces more pollution and harms the environment. The vehicle scrappage policy begins after the car registration gets over.

What are the main features of the vehicle scrappage policy?

The highlights of the vehicle scrappage policy announcement are as follows:

  • A system must be organized to scrap unfit vehicles.

  • People should focus on buying less polluting and technically advanced vehicles.

  • The vehicle owners who use this policy will receive certain benefits.

  • Scrapping old & unfit vehicles will improve air quality by reducing air pollution from bad engines.

What are the benefits of a vehicle scrappage policy?

The benefits of the new vehicle scrappage policy are as follows:

  • Phasing out old vehicles will lead to less air pollution and better air quality.

  • Vehicle owners will receive tax benefits by using this policy.

  • The recycling industry will earn more revenue.

  • The implementation of the vehicle scrappage policy will lead to new job opportunities.

  • It will be very beneficial for the automobile industry as it will lead to an increased demand for new vehicles.

What are the eligibility criteria for the vehicle scrappage policy?

The vehicle should be 15 years old or more if commercial, and it should be 20 years old or more if it is a passenger vehicle to be eligible for the vehicle scrappage policy. Driving the older vehicles as specified would cause the violation of traffic rules and lead to legal punishment. Nonetheless, traffic rules ensure safety while driving.

Categorization of Vehicles for Scrappage Policy:

Vehicles are categorized into different types, and the scrappage policy is different for each category.

  • Commercial vehicles

  • Government vehicles

  • Private vehicles

  • Vintage vehicles


The demand for better vehicles will increase, and people will become more responsible with this new vehicle scrappage policy. Now, it will increase the demand for new vehicles, requiring vehicle owners to have car insurance as per the set traffic rules. Hence, you can refer to the top & most reliable car insurance company.

Team Kotak GIC

The content of this blog has been created and carefully reviewed by the esteemed team at Kotak General Insurance, with the sole purpose of providing valuable guidance and sharing insights on the importance of general insurance. Our objective is to assist users in making informed decisions when purchasing or renewing insurance policies for their cars, bikes, and health. Our expertly curated information aims to empower our readers with the knowledge they need to protect their valuable assets and financial interests.