India’s automotive sector is undergoing a massive transformation, driven by the government’s focus on sustainability, safety, and modernization. With rapid advancements in technology, rising concerns about pollution, and the push toward electric mobility, several new policies are being implemented that directly impact both car and bike owners.
From fuel efficiency norms and safety mandates to incentives for electric vehicles (EVs) and the introduction of scrappage policies, these regulations are changing the way Indians buy, own, and use their vehicles. For consumers, understanding these changes is essential to making informed decisions about their next purchase or managing their existing vehicles.
In this blog, we will break down the latest government policies and analyze how they affect car and bike owners across the country.
1. Vehicle Scrappage Policy – Phasing Out Old Vehicles
One of the most significant policies affecting owners is the Vehicle Scrappage Policy, launched to reduce pollution and improve road safety.
Key Points:
- Private cars older than 20 years and commercial vehicles older than 15 years must undergo a fitness test.
- Vehicles failing the test will be deregistered and sent for scrapping.
- Owners scrapping their old vehicles can get incentives, such as a rebate on new vehicle purchase and waivers on registration fees.
Impact on Owners:
- Cost consideration – Many car and bike owners with older models will need to upgrade sooner than expected.
- Resale value – Old vehicles will fetch lower resale prices but scrapping incentives may balance this.
- Cleaner environment – Owners of new vehicles will benefit from reduced pollution and better air quality.
2. Push Towards Electric Vehicles (EVs)
The government is aggressively promoting electric mobility through schemes like FAME-II (Faster Adoption and Manufacturing of Hybrid & Electric Vehicles) and new state-level EV policies.
Key Points:
- Subsidies on EVs reduce purchase cost significantly.
- Road tax exemptions and registration fee waivers for EVs in many states.
- Installation of EV charging stations across highways and cities.
- GST on EVs reduced to 5% compared to 28% on petrol/diesel vehicles.
Impact on Owners:
- Affordability – EVs are becoming cheaper than ever with government support.
- Running cost savings – Owners save up to 70% on fuel expenses.
- Long-term benefits – Early EV adopters may enjoy greater resale value as demand grows.
- Challenges – Limited charging infrastructure and higher battery replacement cost still worry some owners.
3. BS6 Stage II (Real Driving Emission Norms)
From April 2023 onwards, India moved to BS6 Phase II norms, also known as Real Driving Emissions (RDE). These stricter rules continue to apply in 2025.
Key Points:
- Cars and bikes must meet emission standards not just in labs but also in real-world driving conditions.
- Mandatory OBD-2 (Onboard Diagnostics) system for real-time emission monitoring.
- Better fuel efficiency and cleaner engines in new vehicles.
Impact on Owners:
- Higher upfront costs – Vehicles are slightly more expensive due to advanced technology.
- Savings in the long run – New engines are more fuel-efficient, helping owners cut fuel costs.
- Eco-friendly driving – Lower emissions contribute to cleaner cities.
4. Mandatory Safety Features
Safety is now a top priority in government policy. Cars and two-wheelers must come equipped with modern safety systems.
Key Points:
- Dual airbags, ABS, reverse parking sensors, and seatbelt reminders are mandatory in cars.
- Helmet laws for two-wheelers are strictly enforced, with penalties for non-compliance.
- New crash test norms and child safety regulations.
Impact on Owners:
- Safer journeys – Owners and passengers benefit from better protection.
- Slight price increase – Safety features have increased vehicle prices marginally.
- Insurance premiums – Safer cars may help reduce insurance costs.
5. Green Tax on Polluting Vehicles
The government has introduced a green tax on older, more polluting vehicles.
Key Points:
- Tax applied at the time of renewing registration for older vehicles.
- Higher tax rates in polluted cities and urban areas.
- Revenue generated is used for tackling air pollution.
Impact on Owners:
- Higher costs for old vehicles – Owners of 10–15-year-old vehicles face extra charges.
- Encourages upgrade – More people may switch to newer or electric vehicles.
6. Digital Transformation in Vehicle Ownership
The government is also digitizing vehicle ownership to make processes easier for citizens.
Key Points:
- Digital driving licenses and RCs available on DigiLocker and mParivahan apps.
- Online payment of road taxes, challans, and insurance.
- Faster registration and transfer of vehicles.
Impact on Owners:
- Convenience – No need to carry physical documents everywhere.
- Transparency – Reduces corruption in RTO processes.
- Ease of buying/selling – Online transfers make ownership changes smooth.
7. Fuel Policies and Alternative Fuels
India is working toward reducing dependence on imported crude oil by promoting alternative fuels.
Key Points:
- E20 fuel (20% ethanol blend) is being rolled out across the country.
- Incentives for CNG, LNG, and hydrogen-powered vehicles.
- Long-term roadmap to shift from petrol/diesel to greener fuels.
Impact on Owners:
- Cost savings – CNG and ethanol-blended fuels are cheaper than petrol/diesel.
- Engine compatibility – Not all old cars and bikes can run on higher ethanol blends.
- Future-proofing – Owners of flex-fuel vehicles will have an advantage.
Conclusion
The Indian automotive industry is evolving rapidly, guided by government policies focused on sustainability, safety, and modernization. For car and bike owners, these changes bring both challenges and opportunities. While policies like scrappage, green tax, and safety mandates may increase short-term costs, they pave the way for cleaner air, safer roads, and better ownership experiences.
