17 September 2025
India's vehicle scrappage policy: Key insights for 2025
Article Summary
Explore how India's vehicle scrappage policy can drive sustainability through data-driven strategies, emissions reduction, and fleet modernization.
New Delhi air quality is among the worst of all global capitals. As the country struggles with pollution, India’s vehicle scrappage policy has come under renewed attention.
Launched in 2021 as the Voluntary Vehicle-Fleet Modernization Program (V-VMP), the government policy aims to phase out unfit, polluting vehicles and promote cleaner, safer alternatives, transforming the automotive industry in India.
Although implementation has been uneven—as seen when the Delhi government paused a proposed fuel ban and impounding for end-of-life vehicles—the policy remains central to India’s efforts to reduce emissions, improve road safety and modernize its fleet.
For local mobility stakeholders, understanding how the scrappage framework operates is key to anticipating both challenges and opportunities ahead.
What is the India vehicle scrappage policy and how does it work?
The V-VMP is India’s national vehicle scrappage policy, designed to phase out unfit and polluting vehicles to reduce air pollution in Indian cities, improve road safety and create an organized system for vehicle recycling.
Under the policy, personal vehicles more than 15 years old and commercial vehicles more than 10 years old must undergo regular fitness tests to remain on the road.Currently, one old truck or bus with BS-4 engine has emissions equal to 14 new trucks with BS-6 engine; similarly, one old car’s emissions with BS-4 are equal to 11 new cars with BS-6.
The replacement of end-of-life vehicles is projected to lead to a 15–20% reduction in overall emissions.
S&P Global Mobility’s Vehicles in Operation insights highlight broader industry impacts of an aging fleet. By leveraging this data, OEMs and suppliers can plan for vehicle replacement and parts demand, recycling companies can anticipate the likely flow of end-of-life vehicles and insurance firms can better assess risk and set premiums.
Vehicles that fail their fitness tests can be scrapped at a Registered Vehicle Scrapping Facility (RVSF), where owners receive a certificate of deposit. This certificate can be used to claim incentives, such as OEM discounts on new purchases.
The policy offers clear benefits from lower emissions, safer roads and a boost to the auto and recycling sectors. It would also help formalise the scrappage industry. But challenges remain. Limited incentives, inadequate infrastructure and the financial burden on owners continue to slow adoption.
The government is now considering fitness- and pollution level-based exemptions for New Delhi and surrounding regions, as opposed to blanket scrappage based on vehicle age.
Tracking India’s scrappage progress
Chart 1: Scrapped vehicles in India by certificate of deposit
India has an estimated 12 million vehicles eligible for scrappage, including 4.5 million medium and heavy commercial vehicles and 7.5 million light vehicles. However, from August 1, 2022, to July 31, 2025, only about 350,500 vehicles were actually scrapped at RVSFs—just under 3% of eligible vehicles (see chart below).
Chart 2: India vehicle scrappage policy progress
Vehicle age and fleet trends in India
In addition to analyzing total scrappage numbers, the average age of vehicles on Indian roads is a critical factor driving the need for modernization. S&P Global Mobility’s Vehicles in Operation data shows trends in average vehicle age across vehicle categories from 2018 to 2025:
Chart 3: Average age of vehicles in operation in India
As shown in the chart above, average vehicle age trends show the age of heavy commercial vehicles declining slightly, light commercial vehicles rising and passenger vehicles continuing to age.
Customer incentives under India's vehicle scrappage policy
As vehicles age, incentives are crucial to increase scrappage rates to meet government targets. The V-VMP offers significant discounts to customers to ensure Indian roads are safer and cleaner and vehicles are more efficient. Commercial and passenger vehicle manufacturers have also shown a willingness to offer discounts for a limited period of two years and one year respectively. (See table below for details.)
These incentives not only encourage owners to scrap older vehicles but also promote the purchase of newer, environmentally friendly alternatives.
Charting a path forward
India’s vehicle scrappage policy is still in its early stages, but it provides a foundation to modernize the fleet, reduce emissions and improve road safety. With supportive policies, shifting automotive industry trends and targeted incentives, India has the means to accelerate vehicle scrappage. Data from our Vehicle in Operation analysis pinpoints where replacement is most needed and how stakeholders can plan effectively.
As the policy is implemented, aligning scrappage efforts with data-driven insights will be critical to achieving automotive sustainability.
Join us in shaping a greener future for India's transportation sector. Learn more and speak to us about our Vehicles in Operation data and solutions.
This article was published by S&P Global Mobility and not by S&P Global Ratings, which is a separately managed division of S&P Global.