In anticipation of the upcoming festive season, automobile manufacturers across various segments—including passenger cars, luxury vehicles, and heavy transport—have reached an agreement to provide discounts ranging from 1.5 per cent to 3.5 per cent for customers who choose to scrap their old vehicles and purchase new ones. According to sources who spoke to The Times of India, some of the leading luxury car manufacturers have consented to offer discounts of approximately 25,000 Indian Rupees, with others expected to establish a maximum limit on the discount amount.
The automotive industry and the government are slated to announce these measures on Tuesday, following years of deliberation. Since the introduction of the vehicle scrapping policy in March 2021, Nitin Gadkari, the Minister for Road Transport and Highways, has been advocating for incentives such as discounts and reduced GST rates to encourage both car owners and commercial vehicle operators to scrap their older vehicles.
In 2022, the Ministry of Road Transport issued an advisory to automobile associations, urging their members to offer discounts of up to 5 per cent on the sale price for customers scrapping their old vehicles. However, the industry did not adhere to this suggestion, opting instead to negotiate discounts that were more aligned with their commercial interests.
An unnamed source stated, “Currently, some vehicle manufacturers are offering discounts on new commercial vehicles when customers scrap their old ones. If more manufacturers follow suit, it will provide greater motivation for people to phase out older, more polluting vehicles.”
Despite the government’s efforts, voluntary vehicle scrapping has not gained significant traction due to various factors. To date, approximately 120,000 vehicles have been scrapped at registered scrapping centers, with nearly 61,000 of these being government vehicles over 15 years old. The government has set a target to scrap around 90,000 old government vehicles by March 2025.
In an effort to facilitate the scrapping process, the government has initiated the establishment of 60 registered vehicle scrapping facilities and 75 automated testing stations. So far, 21 states and union territories have announced concessions on motor vehicle tax for vehicles purchased against a certificate of deposit for a scrapped vehicle. To further incentivise participation, 18 states and union territories have declared a waiver of pending liabilities on vehicles offered for scrapping at designated centers.
At present, even car dealerships do not proactively inform potential buyers about the scrapping policy. As a result, individuals interested in scrapping their vehicles must take the initiative to contact authorised centers and arrange for the scrapping process themselves.