India’s vehicle scrappage framework now operates through a regulated and digitally monitored system. Vehicles cannot be dismantled or removed from the transport registry through informal channels without creating compliance risks.
Within this framework, the Certificate of Deposit (CoD) functions as the formal starting point of regulated scrappage. It marks the entry of a vehicle into the authorised recycling network and triggers the subsequent compliance steps required under the vehicle scrappage policy in India.
The CoD connects physical handover, database verification, deregistration procedures, and financial incentive eligibility into a single documented process. Its role becomes clearer when examined in detail within the scrappage lifecycle.
What Is a Certificate of Deposit (CoD)?
A Certificate of Deposit in the automotive industry is the first formal document issued when a vehicle is handed over to an authorised Registered Vehicle Scrapping Facility. It confirms that the vehicle has entered the regulated scrappage system. The certificate is digitally generated and linked to government transport databases, ensuring verification of ownership details, chassis number, and registration records. It serves as proof of deposit into the scrappage network, not confirmation of destruction.
The Certificate of Deposit is issued at the time of physical handover. Dismantling, de-pollution, and material recovery take place only after this stage within the authorised facility. This sequence is important in the process outlined in how to scrap a vehicle in india, where issuance of the certificate precedes final deregistration and closure of the vehicle record.
Why Certificate of Deposit Was Introduced Under Vehicle Scrappage Policy
The introduction of the certificate of deposit automotive industry system was not merely administrative. It was a structural intervention aimed at reforming how End of Life Vehicles are managed in India.
1. Formalisation of Scrappage
Historically, vehicle dismantling often occurred through informal networks. The certificate of deposit in the automotive industry mechanism ensures that scrappage is conducted only through authorised channels.
This formalisation strengthens regulatory oversight and aligns with the broader objectives of managing end-of-life vehicles in India responsibly.
2. Elimination of Illegal Dismantling
Illegal resale of parts, identity misuse, and tax leakage were major concerns. The certificate of deposit automotive industry framework integrates scrappage with central transport systems, eliminating parallel informal markets.
3. Digital Traceability
Each RVSF certificate of deposit is digitally recorded. This enables traceability from deposit to de-registration, creating transparency in the vehicle retirement process.
4. Owner Liability Protection
Once the certificate of deposit (CD) is issued, the risk of misuse under the previous owner’s name is significantly reduced. This legal protection was one of the key reasons for introducing the framework.
Benefits of a Certificate of Deposit
The certificate of deposit (CD), working as an automotive industry document delivers layered benefits that extend beyond compliance. It creates financial value, legal clarity, and environmental accountability.
1. Financial Incentives
A valid CD enables road tax concessions and registration fee waivers on new vehicle purchases, subject to applicable rules. Manufacturers may also offer scrappage-linked discounts upon submission of the certificate.
2. Legal Ownership Closure
The CD confirms that the vehicle has formally exited circulation through an authorised facility. This closes the registration record and prevents future liability linked to the vehicle.
3. Environmental Compliance
Processing through an authorised RVSF ensures regulated dismantling and material recovery. This supports resource reuse and contributes to circular economy practices within the automotive sector.
4. Alignment with Carbon and Net Zero Strategies
Formal scrappage contributes to measurable emission reductions across supply chains. The certificate of deposit indirectly supports reporting frameworks such as Scope 1 2 3 emissions and aligns with long-term planning under a structured net zero roadmap.
How the Certificate of Deposit Is Used
A Certificate of Deposit (CD) issued under the Vehicle Scrappage Policy has defined regulatory and financial uses.
1. Vehicle Deregistration
The CD is required to initiate permanent deregistration of the vehicle at the Regional Transport Office. It serves as legal confirmation that the vehicle has entered the authorised scrappage system, relieving the previous owner of future liability.
2. Tax and Registration Benefits
The CD enables up to 25 percent concession on road tax for a new vehicle purchase and waiver of registration fees, subject to state provisions. It is valid for a defined period and must be submitted within the prescribed timeline to claim benefits.
3. Manufacturer Incentives
Vehicle manufacturers may offer additional discounts, typically up to 1.5 percent on ex-showroom prices of select make/model, against a valid CD when purchasing a new vehicle.
4. Transferability and Sustainability Reporting
The CD is transferable. If the original owner does not intend to purchase a new vehicle, the certificate may be transferred to another eligible buyer. At present, DigiELV is the only MoRTH-authorised platform enabling lawful digital trading of Certificates of Deposit issued from authorised scrapping facilities, ensuring verified, transparent transactions linked to actual scrappage records.
Who Issues the Certificate of Deposit and When You Receive It
The authority and timing of issuance are critical to the legal validity of the certificate of deposit automotive industry document.
1. Role of Authorised Registered Vehicle Scrapping Facilities
Only an authorised facility can generate a legally recognised certificate of deposit record. These facilities operate under strict regulatory guidelines, as detailed in registered vehicle scrapping facility compliance frameworks.
2. Digital Generation Process
The certificate of deposit is generated through government integrated portals once ownership verification and vehicle inspection are completed.
3. Issuance Timeline
In most cases, the RVSF certificate of deposit is generated shortly after successful validation and physical vehicle deposit.
Why Scrapping Through an Authorised Facility Is Mandatory
Under India’s Vehicle Scrappage Policy, only a Registered Vehicle Scrapping Facility (RVSF) is authorised to process end-of-life vehicles within the formal system. Scrapping through informal channels does not complete the legal lifecycle of the vehicle.
An authorised facility ensures official deregistration from the VAHAN database. Without this process, the registration record may remain active, leaving the previous owner exposed to future legal or liability risks.
Authorised facilities are also required to follow prescribed de-pollution and dismantling standards. Hazardous fluids, batteries, and metal components must be handled according to environmental guidelines. Informal dismantling does not follow these standards and may result in improper disposal.
Using an RVSF ensures traceable documentation, regulated material recovery, and closure of ownership records within the legal framework.
Conclusion
The certificate of deposit in the automotive industry system supports India’s regulated vehicle scrappage process. It enables legal deregistration, access to financial incentives, and routing of vehicles to authorised facilities. The framework ensures documented recovery, prevents informal disposal, and maintains compliance with transport and environmental regulations governing end-of-life vehicles.
FAQs
Yes. A CD is required to initiate permanent deregistration under the vehicle scrappage policy in India legally.
Only an authorised Registered Vehicle Scrapping Facility issues the CD through government-linked digital systems after verification.
The CD is usually generated shortly after document verification and physical handover at the authorised facility.
A valid CD enables road tax rebates, registration fee waivers, and eligible manufacturer discounts on new purchases.
Yes, a CD can be officially sold on DigiELV platform. People looking to buy new vehicle in India can purchase CD on DigiELV and obtain the benefits as approved under the new vehicle scrappage policy.
The CD has a defined validity period of 2 years for claiming incentives, subject to applicable state regulations.
The CD is issued at handover, before dismantling begins within the authorised scrappage facility.
Without a CD, deregistration cannot proceed and responsible scrappage-linked benefits cannot be claimed legally.
No. Only authorised scrapping facilities connected to government systems can issue a valid CD.
