Vehicle Scrappage Policy

Think of an old car the way you'd think of an old refrigerator that technically still runs but quietly uses far more electricity than a new one, it isn't broken, it's just become inefficient and, in a vehicle's case, considerably more polluting than what modern engineering can now deliver. India's Vehicle Scrappage Policy, in effect since April 2022, is built around exactly this insight, that a vehicle's age itself, not just whether it happens to break down, is a legitimate reason to require it prove it's still fit to be on the road.

The mechanism is a mandatory fitness and emissions test, passenger vehicles older than 20 years and commercial vehicles older than 15 years must pass this test to keep their registration valid, and vehicles that fail, or whose owners simply choose not to test them, are meant to be scrapped through officially registered scrapping facilities rather than kept running indefinitely or sold informally into secondary markets with even weaker oversight.

To make scrapping an old vehicle attractive rather than purely punitive, the policy pairs the fitness requirement with real financial incentives, a certificate of deposit from scrapping an old vehicle earns a 4 to 6 percent discount on a new vehicle's ex-showroom price plus a waiver of registration charges, incentives the industry expects could lift new vehicle sales by 10 to 12 percent annually as India's ageing vehicle fleet works through this transition.

State-level policies have started building further on this base, Delhi's 2026 EV Policy layers scrapping incentives worth up to Rs 1 lakh on top of the national framework specifically for owners who replace an old vehicle with an electric one, showing how the scrappage policy has become a foundation other, more targeted state incentives now build directly on top of.