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Union Budget 2021: Vehicle Scrappage Policy announced, details to follow 

Union Budget 2021: The long-awaited scrappage policy has finally been announced in the Union Budget 2021 delivered by Finance Minister Nirmala Sitharaman. While the voluntary policy was sketched, details of the scheme are likely to be announced by the Ministry of Road Transport and Highways in the weeks to come.

  • The scheme will apply to 20 years old private vehicles and 15-year-old commercial vehicles.

  • Details of the scheme will be outlined by the Ministry of Road Transport and Highways.

  • Likely to be a voluntary scheme.


Union Budget 2021: Vehicle scrappage policy: In-line with expectations from the industry, the Union gove
ment has announced the scrappage policy in the Union Budget 2021. The gove
ment hopes the policy will look to phase out older, inefficient, and polluting vehicles and in tu
promote the use of more environment-friendly vehicles. The scheme will apply to private vehicles above the age of 20 years and commercial vehicles above the age of 15 years.

While the specifics of the policy are likely to follow in the days to come. We expect the policy to provide monetary incentives to owners of vehicles over the age of 15 years that are polluting and unfit to run, in lieu of their next vehicle purchase. It also is likely that these incentives will be available in the form of road tax rebates on the purchase of your next vehicle.

"We are separately announcing a voluntary vehicle scrapping policy to phase out old and unfit vehicles. This will help in encouraging fuel-efficient, environment-friendly vehicles, thereby, reducing vehicular pollution and oil import bills," Finance Minister Nirmala Sitharaman said while presenting the Union Budget 2021.

"Vehicles would undergo fitness tests in automated fitness centers after 20 years in case of personal vehicles and after 15 years in case of commercial vehicles. The details of the scheme will be separately shared by the Ministry (Ministry of Road Transport and Highways)," she said.

According to a previous statement by the Ministry of Road Transport and Highways the policy is likely to be brought into effect from 1st April 2021. At the time MoRTH had said that the new policy would invigorate the automotive sector, making India a vehicle manufacturing hub while reducing the price of vehicles on sale in India.

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