Srishti Sinha
In 2021, the Government of India launched the Voluntary Vehicle-Fleet Modernization Programme (VVMP), commonly referred to as the Vehicle Scrappage Policy, with a threefold ambition: to improve road safety, reduce urban air pollution, and kick-start a domestic circular economy for vehicle materials. The policy couples regulatory instruments with financial incentives and institution-building to formalize how “end-of-life” vehicles (ELVs) are retired and recycled.
The VVMP is primarily a regulatory policy, i.e., it introduces legal rules and mandatory processes like automated fitness testing at ATSs and the registration and functioning rules for Registered Vehicle Scrapping Facilities, RVSFs. But it also has strong distributive elements, like financial incentives, like registration-fee waivers, road-tax concessions designed to encourage vehicle owners to opt into scrappage, and constituent features, because it creates and certifies new institutional infrastructure (ATSs, RVSFs) that did not exist at scale before. In short, VVMP is a mixed instrument with regulation at its core and incentives plus institutional architecture as enabling complements.
VVMP is a targeted policy. It targets vehicles that are unsafe or polluting, identified via fitness testing, certain older government fleet vehicles (for which renewal is limited), and private vehicles whose owners choose to participate in exchange for benefits. Rather than mandating blanket retirement by age alone, the policy uses fitness and pollution criteria so it zeroes in on the high-risk segment of the vehicle population while allowing well-maintained vehicles to remain in service. This targeting aims to reduce social disruption while tackling the most damaging vehicles.
Key Stakeholders
Primary beneficiaries include urban residents who breathe less polluted air and face reduced road safety risks; vehicle owners who receive fiscal incentives when replacing scrapped vehicles; and formal recyclers who gain a regulated stream of ELVs. Secondary beneficiaries include automobile manufacturers, which may see demand for replacements, and the broader industrial sector that can access recycled metals.
Key stakeholders are:
- Ministry of Road Transport & Highways (MoRTH): rule-making and oversight.
- State transport departments: implementation of tax concessions and enforcement.
- RVSFs and ATS operators
- OEMs: who often run trade-in or discount programmes
- Citizens interact through the Parivahan/vscrap digital interfaces.
The government’s role is to set standards and incentives; private operators run the facilities, and the market sets scrappage prices.
Functioning
- MoRTH issued the core notifications establishing ATS requirements and RVSF rules in September-October 2021 and has since issued amendments and state-level circulars to operationalize incentives and testing mandates. These notifications formalize facility certification, environmental safeguards, and CoD (Certificate of Deposit) procedures.
- RVSFs and ATSs are the visible backbone. The government published dashboards and portals (vscrap.parivahan) to manage applications and record scrapped vehicles, and the number of operational RVSFs and ATSs has steadily increased since 2021-though capacity gaps remain in many regions. As the central dashboard shows, tens of thousands of private scrappage applications have been processed and RVSF counts have grown, signalling early traction.
- Incentives (registration fee waivers and road-tax reductions) are administered by states, while digital platforms (Parivahan/vscrap) provide the transactional backbone for issuing CoDs and tracking scrappage. OEMs and dealers complement public incentives with market offers to smooth replacement purchases.
The Policy Cycle: From Agenda to Evaluation
- Agenda setting: Chronic urban air pollution, road-safety concerns, and a growing ELV stock made scrappage salient. The 2021 policy announcement followed sustained public and expert attention on vehicular emissions and informal dismantling hazards.
- Formulation: MoRTH designed a hybrid instrument: automated fitness testing (to avoid ad hoc age limits), certified scrapping facilities, and a set of financial incentives to encourage voluntary participation.
- Enactment: The 2021 G.S.R. notifications created the legal scaffolding; subsequent amendments (2022-24) refined testing timelines, environmental standards for RVSFs, and state coordination mechanisms.
- Implementation: Facilities have been set up, portals activated, and early scrappage has occurred. Official counts show operational RVSFs across multiple states and hundreds of thousands of digital applications being processed, evidence of initial uptake. However, the roll-out has been phased because ATS/RVSF capacity has varied by state.
- Evaluation: Early evaluation emphasizes implementation constraints, facility shortfalls, and uneven state incentives, so while outputs (vehicles tested, CoDs issued) are measurable, medium- and long-term outcomes (sustained emissions reduction, recycling efficiency) require multi-year monitoring. Independent analyses and think-tank reviews have highlighted both the promise and the practical bottlenecks that must be addressed for full impact.
Theory of Change: How VVMP Expects to Work
The policy logic is straightforward. By establishing credible, automated testing (ATS) and convenient, certified scrapping options (RVSFs), and by attaching financial incentives (CoD benefits), the government expects owners of polluting and unsafe vehicles to opt into scrappage. That increases formal recycling throughput, reduces informal dismantling harms, and shrinks the share of high-emission vehicles, producing cleaner air and safer roads.
Over time, recovered materials from ELVs feed a circular supply chain, lowering dependence on raw imports and supporting domestic manufacturing. Early inputs (notifications, portals, facility licensing) have generated outputs (scrapping applications, RVSFs operational), but outcomes depend on scaling facilities, harmonizing state incentives, and sustained enforcement. SIAM and other industry studies estimate a large ELV stock of millions of vehicles by mid-decade, indicating the potential scale of material recovery if the system works at full tilt.
Emerging Issues and Way Forward
VVMP’s strengths are its coherent mix of regulation, incentives, and institution-building; its digital design; and its circular-economy potential. The main risks are implementation gaps (insufficient ATS/RVSF coverage), state-to-state policy fragmentation on incentives, and equity concerns if low-income owners face replacement burdens. To succeed, the policy needs expedited and equitable facility roll-out, clearer and consistent state incentives, active OEM partnerships for affordable replacements, and rigorous outcome evaluation on emissions and recycling yields.
Conclusion
India’s 2021 Vehicle Scrappage Policy is a policy with pragmatic ambitions like cleaner air, safer roads, and a circular-economy pathway for vehicle materials. It mixes regulatory clarity with targeted incentives and new institutional capacity. Early implementation shows promise, but the transition from outputs to outcomes will require steady capacity expansion, better intergovernmental coordination, and transparent evaluation over the coming years. The VVMP’s success will be judged by whether it turns policy design into sustained environmental and economic gains.
References
- Government of India. (2021). Vehicle Scrappage Policy: G.S.R. Notifications on Automated Testing Stations and Registered Vehicle Scrapping Facilities. Ministry of Road Transport and Highways. https://morth.nic.in
- Government of India. (2023). Vehicle Scrappage Policy implementation updates. Press Information Bureau. https://pib.gov.in
- Ministry of Road Transport & Highways. (2024). V-Scrap Portal Dashboard. https://vscrap.parivahan.gov.in
- Society of Indian Automobile Manufacturers (SIAM). (2021). End-of-life vehicle recycling potential and economic benefits. https://www.siam.in
- TERI (The Energy and Resources Institute). (2022). Review of India’ s Vehicle Scrappage Policy: Implementation Challenges and Opportunities. https://www.teriin.org
About the Contributor
Srishti Sinha is a student of sociology at Miranda House, University of Delhi, with a keen interest in gender, cultural representation, development, public policy, and research.
Acknowledgement
The author expresses her sincere gratitude to the IMPRI team for their invaluable guidance throughout the process.
Disclaimer: All views expressed in the article belong solely to the author and not necessarily to the organisation.
Acknowledgment: This article was posted by Aashvee Prisha , a Visiting Researcher at IMPRI.
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