Vehicle Scrappage policy launched by PM Modi: Polluting, unfit cars/bikes to be scrapped

Through a video conference which also had Nitin Gadkari, Minister for Road Transport and Highways, the PM confirmed that only polluting as well as unfit for the road vehicles will be scrapped.

By:Updated: Aug 13, 2021 4:18 PM

It is official! Prime Minister Narendra Modi today announced the start of the Vehicle Scrappage Policy in India. The PM said that this is a significant milestone as far as India’s development is concerned. Through a video conference which also had Nitin Gadkari, minister for Road Transport and Highways, the PM confirmed that only polluting as well as unfit for the road vehicles will be scrapped. Gadkari joined by saying that more than one crore vehicles have been found without valid fitness certificates. These are either still plying on the roads or parked to rot. While the age of the vehicle isn’t going to be criteria for it to be scrapped, this also gives a fresh lease of life to vintage as well as classic cars. A scientific disposal of old as well as polluting vehicles will be carried out, confirmed the PM.

PM Modi also said that we will be generating wealth from waste, a concept followed in developed countries. Many authorised registered vehicle scrappage as well as automated testing centres are expected to spring up in various parts of the country following this announcement. Manufacturers like Renault, Mahindra have already established their scrapping centres whereas Toyota-Maruti coalition too has one in the works. Renault offers scrappage-based incentives to its customers as well.

Rebates are going to handed by the state government and not by the central. A flat 5 per cent may be offered by the central government on new cars that are purchased against the scrapped units. However, the state governments are at a liberty to provide more incentives.

Arindam Guha, partner and leader, government and public services, Deloitte India said,

India’s vehicle scrapping policy represents one of the recent additions to the list of Circular Economy initiatives adopted by the country. It aims to facilitate recovery of key material used in vehicles in the form of steel, aluminum, plastic etc. by leveraging a scientific process for scrapping which can then be reused in different industries including auto manufacturing. Once there is an adequate number of registered vehicle scrapping facilities across the country, this is likely to lower costs of these key inputs. The vehicle scrapping policy is not only expected to reduce environmental pollution and improve road safety by getting end of life and unfit vehicles off the road but also encourage sale of new vehicles through financial incentives in the form of vehicle registration charges and reduced road tax, thereby providing a fillip to the automobile industry. In addition to reducing vehicular pollution and improving road safety, the vehicle scrapping policy is also likely to attract additional investments and generate employment through registered vehicle scrapping facilities (RVSFs), with around 50-60 such centers likely to be set up across the country. The policy also provides an opportunity for small & medium enterprises to set up vehicle testing centers for assessing the condition of old vehicles and issue fitness certificates. These testing centers, which are envisaged to be set up at the district level, would have to be equipped to conduct emission, braking / safety equipment and other tests as per the Central Motor Vehicle Rules, 1989. While the Vehicle Scrapping Policy is definitely a step in the right direction, its effective implementation would depend a lot on the States who would have to formulate supporting policies in areas like (a) financial incentives for replacement vehicles in terms of waiver of registration charges, reduced road taxes as well as disincentives for end of life vehicles in the form of higher registration renewal charges & road taxes; (b) facilitating development of industrial infrastructure and eco-system for setting up registered vehicle scrapping facilities as well as vehicle testing facilities. States which are early adapters are likely to capture a higher share of investments and economic benefits. Gujarat is well poised to leverage the benefits of the Vehicle Scrapping Policy due to a number of inherent advantages. These include (a) existing industrial infrastructure and eco-system for scrapping ships in Alang with requisite pollution management, effluent treatment systems which have the potential to reduce incremental investments in scrapping facilities; (b) access to the Western coastline which could enable targeting imported vehicles from other countries for scrapping thereby providing economies of scale for an integrated scrapping facility; (c) a vibrant automobile manufacturing industry which not only provides a ready market for materials recovered from scientific scrapping facilities but could also represent a potential investor base for vehicle scrapping facilities.

We will get a clearer picture of how this will function in the coming days. You can also watch the PM’s video address below

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