85,000 Vehicle Claim Benefits Worth ₹450 Crore Under Vehicle Scrappage Scheme, 3.6 Lakh Vehicles Scrapped

About 85,000 vehicle owners have claimed incentives valued at nearly ₹450 crore under the Centre's voluntary vehicle scrappage policy, officially designated as the Vehicle Fleet Modernisation Programme, the Ministry of Finance announced on Sunday, Financial Express has reported. The advantages derive predominantly from motor vehicle tax concessions provided by states and Union Territories against certificates of deposit (CDs) issued following the scrapping of old vehicles. 

As many as 27 states and UTs have announced tax rebates of up to 25 per cent on non-transport vehicles and up to 15 per cent on transport vehicles under the scheme.

This development comes at a time when the automobile industry is requesting augmented government incentives, contending that the current structure is insufficient to generate substantial scrappage-driven replacement demand.

According to the ministry, 22 automobile manufacturers are also providing 1.5–3% discounts on ex-showroom prices against scrappage certificates, with approximately 30,000 vehicles having utilised the benefit thus far.

According to official statistics, as mentioned in the report, nearly 3.6 lakh vehicles have been scrapped at registered vehicle scrapping facilities (RVSFs) nationwide. Of these, approximately 1.6 lakh were government-owned vehicles exceeding 15 years of age, demonstrating early compliance by public-sector fleets.

To speed up adoption, the Centre has extended the Department of Expenditure's Scheme for Special Assistance to States for Capital Investment across multiple financial years. The scheme allocated incentives of ₹2,000 crore in FY23, ₹3,000 crore each in FY24 and FY25, and ₹2,000 crore in FY26, linked to milestones in vehicle scrappage and the deployment of automated vehicle testing infrastructure.

Between FY23 and FY25, ₹2,570 crore has been recommended for distribution to states under the scheme.

The government also emphasised capacity development on the ground. To date, 180 registered vehicle scrapping facilities have been approved across 23 states and UTs, of which 123 are operational.

Concurrently, 407 automated testing stations (ATSs) have been sanctioned across 24 states and UTs, with 160 currently operational, enabling fitness testing of ageing vehicles.

Under the voluntary scrappage policy, private vehicles are required to undergo automated fitness testing after 20 years, while commercial vehicles must be tested after 15 years. Vehicles deemed unfit are encouraged to be scrapped through authorised facilities.

The programme is a significant step towards fleet modernisation and environmental sustainability, but, industry stakeholders continue to advocate for stronger financial incentives to drive participation.