Union Transport Minister Nitin Gadkari announced the much-awaited Vehicle Scrappage Policy in the Loksabha on Thursday, March 18.
Gadkari’s announcement has come after Union Finance Minister Nirmala Sitharaman in her Budget 2021 address proposed a Voluntary Vehicle Scrappage Policy to phase out old and unfit vehicles to curb air pollution in the country.
“In the interest of a clean environment and rider and pedestrian safety, the Ministry of Road Transport and Highways is introducing the Voluntary Vehicle-Fleet Modernization Program (VVMP) or Vehicle Scrapping Policy which is aimed at creating an ecosystem for phasing out of unfit and polluting vehicles,” the transport minister said.
Old, end-of-life-vehicles (ELV) cause an estimated 10-12 times more pollution compared with the new ones.
The overarching goal of the policy is to reduce vehicular particulate matter pollution, achieve better fuel efficiency, and boost the availability of low-cost raw materials for the automotive, steel, and electronics industry – while helping the country meet its climate commitments.
In February, Gadkari noted the policy would cover an estimated 51 lakh light motor vehicles (LMV) above 20 years of age, 34 lakh LMVs above 15 years, and 17 lakh medium and heavy motor vehicles above 15 years, and currently without valid fitness certificates.
The policy proposes:
- All vehicles of the Central Government, State Government, Municipal Corporation, Panchayats, State Transport Undertakings, Public Sector Undertakings, and autonomous bodies with the Union and State Governments may be de-registered and scrapped after 15 years from the date of registration.
- Commercial vehicles be de-registered after 15 years in case of failure to get the fitness certificate. As a disincentive measure, increased fees for fitness certificates and fitness tests may be applicable for commercial vehicles 15 years onwards from the date of initial registration.
- Private vehicles be de-registered after 20 years if found unfit or in case of a failure to renew registration certificate. As a disincentive measure, increased re-registration fees will be applicable for private vehicles 15 years onwards from the date of initial registration.
The scheme has also sought to provide strong incentives to owners of old vehicles to scrap their old and unfit vehicles through registered scrapping centers. These centers would be authorized to provide scrapping certificates.
Some of these incentives include:
- Scrap value for the old vehicle given by the scrapping center, which is approximately 4-6 percent of the ex-showroom price of a new vehicle.
- The state governments may be advised to offer a road- tax rebate of up to 25 percent for personal vehicles and up to 15 percent for commercial vehicles
- The vehicle manufacturers are also advised for providing a discount of 5 percent on the purchase of a new vehicle against the scrapping certificate.
- Registration fees may also be waived for the purchase of a new vehicle against the scrapping certificate.
The minister confirmed that efforts are underway for setting up Integrated Scrapping Facilities across India. Some of the identified places include Alang in Gujarat, where it is being planned to develop a highly specialized center for scrapping, among many other potential centers, where different scrapping technologies can be synergized together.
While the Scrappage Policy would be instrumental in eliminating high CO2 emitting old vehicles, studies indicate it would also help significantly to reuse a good chunk of the heaps of auto waste. For instance, auto parts including steel, plastic, and other metals and materials, can be recovered and brought back in use after a vehicle is scrapped. The Vehicle Scrappage Policy can build this circularity.
According to an estimate by the Federation of Indian Chambers of Commerce (FICCI), ELVs have the potential to generate 8 million tons of steel that can be extracted in India by 2025. This can be a significant opportunity for India as a major consumer of steel -- a good percent of which is used by the automobile sector – thereby substituting imports and improving the country's balance of payment.
In addition to the Integrated Scrapping Facilities, the government is looking at the promotion and setting up of Registered Vehicle Scrapping Facility (RVSF) across India and has encouraged public and private participation for opening up of such centres.
Similarly, the Ministry has said it will promote the setting up of Automated Fitness Centres on a PPP model by the state government, private sector, automobile companies, etc.
At first glance, the Vehicle Scrappage Policy has not provided any incentive for replacing old vehicles with electric ones – a move that was highly anticipated by climate experts and electric vehicle stakeholders.
The Ministry of Road Transport and Highways is expected to publish draft notifications in the next few weeks which shall be in the public domain for a period of 30 days to solicit comments and views of all involved stakeholders.
- By Shraddha Kakade,
Asst. Editor, EmergingTechnology News.