India Vehicle Scrappage Policy Outlook and Strategic Direction

Building on the End-of-Life Vehicles (ELV) Rules, 2025 and the expanding scrappage ecosystem, India’s Vehicle Scrapping Policy has shown strong progress. As of 30 January 2026, 129 Registered Vehicle Scrapping Facilities (RVSFs) are operational across 21 States and UTs, and these facilities have collectively scrapped 4,30,306 vehicles up to that date. The scrappage mix is led by Passenger Vehicles (70%), followed by Other Vehicles including 2W and 3W (19%), Trucks (6%), and Buses (5%).

To further accelerate scrappage, the Ministry of Finance (Department of Expenditure), through its Special Assistance to States for Capital Investment (SASCI) 2025 - 26 guidelines (letter dated 22 May 2025), has extended incentives for “Scrapping of Old Vehicles” with a total allocation of $217.5 million USD (₹2,000 crore) on a first-come, first-served basis.

The incentive package includes lump-sum support of $1.1 to $21.8 million USD (₹10 - ₹200 crore) for States/UTs linked to notifying and implementing additional motor vehicle tax concessions (as per GSR 200(E), 26 March 2025), graded per-vehicle incentives for scrapping government-owned vehicles older than 15 years $540–$1,630 USD (₹50,000 - ₹1,50,000) per vehicle and for non-government vehicles $55–$220 USD (₹5,000 - ₹20,000) per vehicle based on scrappage volumes within the State, and incentives for setting up Automated Testing Stations (ATS) worth $0.54 to $0.98 million USD (₹5 - ₹9 crore) per ATS, with payouts linked to award of work and operationalisation, plus extra benefits for timely commissioning.

Scrappage activity is also highly concentrated geographically. The Top 10 States account for the majority of scrappage volumes, led by Uttar Pradesh (43.1%) and Haryana (10.7%), followed by Gujarat (8.1%), Rajasthan (5.9%), Maharashtra (4.4%), Uttarakhand (4.0%), West Bengal (3.9%), Madhya Pradesh (3.5%), Punjab (3.5%), and Karnataka (2.9%).

Alongside scrappage, road safety measures have also been strengthened through the statutory Cashless Treatment for Road Accident Victims Scheme, 2025 (notified 5 May 2025, with detailed SOP guidelines issued 4 June 2025), which provides treatment cover up to $1,631 USD (₹1.5 lakh) per victim for a maximum of 7 days, ensures immediate stabilisation and time-bound emergency care at designated hospitals, and is implemented using integrated platforms e-DAR (police accident reporting) and TMS 2.0 (hospital claims and payments), with reimbursements routed via the Motor Vehicle Accident Fund (MVAF) funded by insurer contributions and budgetary support for uninsured cases.

 In parallel, MoRTH and highway agencies continue to prioritise accident reduction through black spot identification and rectification (short-term measures like signages, markings, barriers and long-term works like geometric improvements and junction upgrades), mandatory third-party Road Safety Audits across project stages, designated Road Safety Officers, improved signage guidelines, electronic accident data management under e-DAR, electronic enforcement rules for high-risk corridors and major city junctions, ambulance deployment at toll plazas, and enhanced Good Samaritan support under the revised Rah-Veer scheme, increasing the reward to $272 USD (₹25,000).

In summary, India’s Vehicle Scrappage Policy is now moving from planning to faster on-ground action, supported by the ELV Rules 2025, more authorised scrapping centres, and SASCI incentives that help states offer tax benefits, scrap older vehicles and add more testing stations, while new road-safety measures are improving emergency care and accident prevention; to boost results further, simple steps like a single online approval system for incentives, instant use of scrappage benefits when buying a new vehicle, more RVSF/ATS coverage in more districts, better public awareness with OEMs/RTOs/insurers, easy replacement finance for small operators, stricter checks on unfit vehicles, a clear state-wise dashboard, and easier vehicle pickup/collection can make scrappage faster, easier and more trusted, though in the near term, passenger vehicles will remain the biggest share and volumes may stay concentrated in a few leading states as other states catch up.

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