The Centre is weighing higher fees to insure and re-register older cars, two officials aware of the discussions said, targeting so-called end-of-life vehicles (ELVs) that guzzle fuel and dirty the air.
The ministries of road transport and finance are studying the proposal to discourage older vehicles by increasing their ownership costs, the people cited above said on the condition of anonymity. Officials met industry executives earlier this month to discuss the matter.
“There were consultations held with the industry in July, and the government was of the view that end-of-life vehicles should be disincentivized. There is a consideration that insurance costs for such vehicles can be increased. Also, higher re-registration costs may also help in this regard,” one of the two officials said on the condition of anonymity.
Queries emailed to the two ministries remained unanswered.
Currently, diesel vehicles in the Delhi National Capital Region (NCR) are considered end-of-life after 10 years, and petrol vehicles after 15 years. For the rest of India, the lifespan is 15 years for transport vehicles and 20 years for non-transport vehicles.
The finance ministry is expected to frame a model that will allow insurers to charge more for ELVs based on their age, condition and emissions, the people cited above said. Besides, fees to re-register vehicles could be set at or above the cost of registering a new vehicle, with these changes potentially incorporated into the Central Motor Vehicle Rules.
“Under the plan, while vehicle scrappage would be the preferred route for old, unfit and polluting vehicles, those looking to extend the life after getting their vehicles tested would also be discouraged, with higher insurance and registration costs,” the second official added.
Carbon dioxide from vehicle exhaust makes up about 12% of air pollution, according to the International Energy Agency. The share is significantly higher in large cities like New Delhi, where air quality frequently reaches “severe” levels. Auto exhaust also includes harmful chemicals such as carbon monoxide, nitrogen oxides, volatile organic compounds, sulfur dioxide and particulate matter.
The Delhi government recently attempted to enforce the rule by refusing fuel for ELVs, but the decision was deferred to November after a public outcry.
Private sector insurers expressed support for higher premiums on older, polluting vehicles, citing both public health and mechanical failure risks.
“Pollution from ELVs contributes to respiratory illnesses like asthma, bronchitis and chronic obstructive pulmonary disease (COPD),” said Arti Mulik, chief technical Officer at Universal Sompo General Insurance. “As insurers, we have a social responsibility to support the environment and public health.”
Mulik added that higher premiums could “reflect on their higher risk of mechanical failures, breakdowns and accidents” and encourage a shift towards cleaner alternatives like electric or compressed natural gas vehicles.