The Government’s Vehicle Scrappage Policy

As per a report by the Centre for Science and Environment (CSE), two-wheelers, such as scooters and motorbikes, emit nearly 32 per cent of air pollutants. In fact, old bikes with poor engine efficiency emit maximum pollutants into the environment. To put a stop to their usage, the central government launched a vehicle scrappage policy in 2021. To know more about this policy, read the below article.

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Why the New Vehicle Scrappage Policy is Launched? 

The demand for two-wheelers has risen over the past few years. The two-wheeler sector contributes about 6% to the GDP of India. Moreover, India is the 7th largest automobile manufacturer in the world and the majority of its production is consumed domestically. Certainly, India has become a highly polluted nation with automobile emittance contributing significantly to air pollution.

The new vehicle scrappage policy aims to stop the usage of old two-wheelers on the roads to reduce air pollution. An old and unfit bike not only contributes to air pollution but also is more prone to mishaps, like road accidents. That is why the new vehicle scrappage policy was introduced by the government.

Moreover, as a bike owner, you must have at least a third-party bike insurance policy to ensure financial safety against any unfortunate incident involving your two wheeler.

Another motive of this new scrappage policy is to boost the auto & metal industry and reduce automobile waste by recycling steel. Abandoning old two-wheelers will also assist in increasing the sales of new models in the automobile sector. 

How Does the New Vehicle Scrappage Policy Works? 

Under the Vehicle Scrappage Policy 2021, an old two wheeler needs to go through a test to assess the vehicle’s fitness and durability. Take a look at how the new policy works along with the mandatory test that every old two-wheeler has to undergo under the new policy: 

1. Fitness Test-As per the new vehicle law, all two-wheelers aged 20 years or more need to undergo a mandatory fitness test. Those who have registered their vehicle for commercial purposes will have to go through this fitness test after 15 years to renew their registration certificate for the next five years.

2. Computerised Fitness Test-The mandatory vehicle fitness test, which is currently conducted manually by a person authorized by an RTO, is soon going to be computerised. This advanced fitness test service will be available under a Public-Private Partnership Model. There will be no human intervention during the computerised test and thus, the results will be correct & valid.

3. Mandatory End of Life Vehicle Certificate-In case a two-wheeler fails to pass the fitness test, it will be issued with an End of Vehicle certificate. Moreover, a bike insurance policy will not be offered by any two-wheeler insurance companies  for these vehicles as they are unfit and no longer roadworthy. As a result, such vehicles will be scrapped at a registered vehicle scrapping facility. On the contrary, those two-wheelers who pass this test can re-register with the RTO.

Incentives Offered Under the New Vehicle Scrappage Policy 

In case your two-wheeler fails the fitness test and you are forced to scrap it under the new vehicle scrappage policy, you can still enjoy the following benefits-

1. Get the Scrap Value of Your Old Two-wheeler: You can get the scrap value when you scrap your old & unfit bike at a registered vehicle scrapping facility centre. A scrapped bike is valued for the weight of its material like- metal and plastics. 

2. Discount on New Two-wheeler: Under the new vehicle scrappage policy, you are eligible for a special discount on the purchase of a new bike against your scrappage certificate. The Ministry of Road Transport and Highways has proposed a special discount of 5% for people whose vehicles have been scrapped under the policy. Thus, you can save money while purchasing a new two-wheeler.

3. Discount on Road Tax and Vehicle Registration: The government is also offering a discount on road tax and vehicle registration to people whose two-wheelers have been scrapped under the new policy. As per the Vehicle Scrappage Policy 2021, the government is allowed to provide a rebate of up to 25% on the road tax. Also, the registration tax on the new bike has been completely waived. 

Final Words

The new vehicle scrappage policy has been designed to phase out all the old, unfit, and polluting vehicles. The policy is being considered a significant milestone in India's development journey. This will also encourage all the citizens to be more environmentally responsible. If your old bike is scrapped and you are planning to buy a new one, do not forget to buy a two-wheeler insurance online policy.

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^The renewal of insurance policy is subject to our operations not being impacted by a system failure or force majeure event or for reasons beyond our control. Actual time for a transaction may vary subject to additional data requirements and operational processes.

^The buying of Insurance policy is subject to our operations not being impacted by a system failure or force majeure event or for reasons beyond our control. Actual time for transaction may vary subject to additional data requirements and operational processes.

#Savings are based on the comparison between highest and the lowest premium for own damage cover (excluding add-on covers) provided by different insurance companies for the same vehicle with the same IDV and same NCB.

*TP price for less than 75 CC two-wheelers. All savings are provided by insurers as per IRDAI-approved insurance plan. Standard T&C apply.

*Rs 538/- per annum is the price for third party motor insurance for two wheelers of not more than 75cc (non-commercial and non-electric)

#Savings are based on the comparison between the highest and the lowest premium for own damage cover (excluding add-on covers) provided by different insurance companies for the same vehicle with the same IDV and same NCB.

*₹ 1.5 is the Comprehensive premium for a 2015 TVS XL Super 70cc, MH02(Mumbai) RTO with an IDV of ₹5,895 and NCB at 50%.

*Rs 457/- per annum (1.3/day) is the price for the third-party motor insurance for private electric two-wheelers of not more than 3KW (non-commercial). Premium is payable on an annual basis