Around 85,000 vehicle owners have availed incentives worth nearly ₹450 crore under the Centre’s voluntary vehicle scrappage policy, officially known as the Vehicle Fleet Modernisation Programme, the Ministry of Finance said on Sunday.
Tax Concessions
The benefits stem largely from motor vehicle tax concessions offered by states and Union Territories against certificates of deposit (CDs) issued upon scrapping 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 comes at a time when the automobile industry is seeking enhanced government incentives, arguing that the current framework is inadequate to drive meaningful scrappage-led replacement demand.
According to the ministry, 22 automobile manufacturers are also offering 1.5–3% discounts on ex-showroom prices against scrappage certificates, with some 30,000 vehicles having availed the benefit so far.
According to official data, nearly 3.6 lakh vehicles have been scrapped at registered vehicle scrapping facilities (RVSFs) across the country. Of these, about 1.6 lakh were government-owned vehicles that were over 15 years old, reflecting early compliance by public-sector fleets.
Scaling Infrastructure
To accelerate adoption, the Centre has extended the Department of Expenditure’s Scheme for Special Assistance to States for Capital Investment over multiple financial years. The scheme earmarked 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 rollout of automated vehicle testing infrastructure. Between FY23 and FY25, ₹2,570 crore has been recommended for disbursement to states under the scheme.
The government also highlighted capacity creation on the ground. So far, 180 registered vehicle scrapping facilities have been approved across 23 states and UTs, of which 123 are operational. In parallel, 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 ministry reiterated that the policy aims to phase out old and polluting vehicles, reduce vehicular emissions and fuel imports, and modernise India’s vehicle fleet through market-led replacement.
