NITI Aayog has raised concerns on a draft voluntary vehicle scrappage policy prepared by the road ministry that seeks to phase out old and polluting automobiles.

Key Provisions of Draft Scrappage Policy:

  • Rebates on road tax upon will be given after showing the certificate of scrapping by a vehicle owner
  • It aims to set up vehicle scrapping centres across the country.
  • Vehicles can be offered for scrapping if they are -
    • impounded or abandoned by enforcement agencies, 
    • beyond repair, 
    • registration certificate has not been renewed (15 years time period)
    • damaged due to fire, natural calamity etc.
  • An authorized vehicle scrapping facility - 
    • Should meet the minimum technical requirements for collection and dismantling centres specified as per the guidelines issued by the Central Pollution Control Board.
    • Must have ‘competent manpower’ to carry out dismantling activities, keeping in mind responsibilities towards the environment. 
    • Need to take no objection certificate from state pollution control board within six months since the beginning of operations, according to the draft guidelines.
    • Must install CCTV cameras which can be audited by government authorities to check compliance with guidelines. 
  • Vehicles cannot be scrapped till fuel, oil and other gases are drained and collected as per in certified containers.
  • A separate record of scrapped vehicles will also have to be registered in the national register for vehicles (VAHAN), which has to be maintained by the Centre.

Need of Policy:

  • The government hopes the policy laced with incentives would drive vehicle sales and help the auto industry that has been experiencing sluggish demand for about a year.
  • It is a move aimed at protecting the environment and promoting legally backed dismantling and scrapping industry.

Concerns by Niti Aayog:

  • It has raised concerns over the definition of the life or age of a vehicle that will prompt their owners to scrap them, saying it may result in an economic loss for the vehicle owner.
  • It feared that India may face the same fate as the US after it implemented the Cash for Clunkers scheme that provided financial incentives to car owners but even after spending $ 3 billion, the U.S economy failed to stimulate. 


Experts said the proposed scrappage policy will be the biggest driver of growth for the domestic auto industry in the short and medium term. However, the government has to be careful while drafting the scheme to plug loopholes so that it is not misused.