The Centre has approved a Rs 9,590 crore vehicle scrappage scheme for Delhi-NCR, a move that could boost truck demand by up to 5%, according to a report by Nomura. The brokerage firm also noted that Tata Motors, Ashok Leyland and Eicher Motors may emerge as key beneficiaries.

Under the scheme, owners of BS-III and older commercial vehicles will have to scrap their vehicles at authorised facilities. BS-IV vehicle owners can either scrap their vehicles or sell them outside the NCR region. To avail benefits of the scheme, owners will need to purchase BS-VI-compliant or electric vehicles.

Demand to depend on how many vehicles are scrapped 

Nomura said the structure of the scheme appears positive for the commercial vehicle sector but the impact on demand will depend on how many vehicles are actually scrapped. 

ALSO READ

“If the trucks are sold out of NCR, they still remain in operation in other parts of the country and hence may not result in incremental demand,” Nomura noted.

Scrappage scheme could add 5% to commercial vehicle demand 

According to Nomura’s estimates, if the programme results in the replacement of 20,000 medium and heavy commercial vehicles (MHCVs) and 25,000 light commercial vehicles, it could generate around 5% incremental demand for both segments.

ALSO READ

Nomura said BS-III trucks and light commercial vehicles (LCV) will be more likely candidates for scrappage because their value has already depreciated significantly. However, the limited availability of electric models in the LCV segment could slow replacement activity.

Manufacturers to offer 8% discount under scheme 

The scrappage scheme aims to reduce air pollution in Delhi and offers several incentives to encourage participation including an 8% discount on ex-showroom prices by automobile manufacturers.

“While an 8% discount on ex-showroom price may not be a challenge for MHCVs, as there is an average discount of nearly 20% on list prices, in the case of LCVs, this may be a challenge,” Nomura said.

Other incentives include a 5% interest subvention on vehicle loans for five years, monthly fuel vouchers of up to Rs 4,800 and additional benefits for electric vehicle purchases. The NCR state governments may waive registration fees and offer motor vehicle tax concessions.

Centre aims to curb pollution through vehicle replacement 

The two-year scheme introduced by the Central government aims to reduce air pollution in Delhi by encouraging owners of older trucks and buses to replace them with cleaner vehicles. 

The policy targets around 207,000 truck and bus owners in Delhi-NCR. According to the report, trucks and buses account for only 3% of the vehicle fleet but contribute 36% of PM2.5 emissions in the region.

The scheme includes Rs 5,040 crore in central government funding and Rs 1,600 crore in tax concessions from participating states.

Conclusion

Nomura believes that the incentives are substantial and could encourage replacement across medium and heavy commercial vehicles, light commercial vehicles and buses.

Delhi remains an important market for commercial vehicle manufacturers as in FY26, MHCV sales in Delhi stood at 15,149 units, while LCV sales stood at 21,873 units, according to Nomura.