Govt notifies scrapping policy, mandates discounts on junking old cars

OEMs, dealers to aid the collection of old vehicles, recyclable spares through the take-back scheme, or by setting up scrapping centres or through tie-ups with such facilities

The Centre has notified a scrap recycling policy to promote circular economy in the steel sector and utilise scrap emanating from vehicles and white goods that have reached their end of life.

Under the policy, the ministry of road transport and highways and the department of heavy industry would work towards “extended producer responsibility” by requiring vehicle manufacturers to incentivise scrapping of unfit vehicles in exchange for price discounts for purchase of new vehicles. "This too shall provide for the required feed to the scrapping centres. MoRTH may formulate an Automobile Fitness Certification Policy to prevent plying of unfit and polluting vehicles. This would facilitate establishment of fitness centres in the private sector by providing supporting policy framework," said the new policy announced by the Union ministry of steel on Friday.

The OEMs and/or its dealers would facilitate collection of old vehicles/ELVs (end of life vehicles)/ recyclable spare parts of old automobiles either through a take back scheme or by setting up scrapping centres of their own or through tie-ups with such facilities, thereby acting as an aggregator for the collection of vehicles.

Unfit vehicles, according to the voluntary decision of the owners, would be considered as the feed material for the steel scrapping centres.

Under the policy, scrap processing units would be set up which could use the new corporate rate structure notified on September 20, offering domestic company incorporated on or after October 1, 2019 and making fresh investment in manufacturing, an option to pay income-tax at the rate of 15 per cent.

Further, the policy said the department of revenue might examine the proposal regarding the exemptions under section 35 AD of Income Tax Act to scrap processing units.
 

The policy requires vehicle manufacturers to shoulder responsibilities to use an increased quantity of recycled material in vehicles and other products, (provided they do not give rise to safety or environmental hazards), thereby creating a market for recycled products, and the percentage use of such recycled materials in vehicles should be periodically audited to ensure compliance.

Additionally, vehicle and white good manufacturers would be required to provide dismantling information for each type of new product within six to two months of the launch and should assist / guide the recycling centers to expand the technological know how for segregation and recycling.

The policy would involve a formal and scientific collection, dismantling and processing activities for end of life products that are sources of recyclable (ferrous, non- ferrous and other non-metallic) scraps.

Under the policy, high quality ferrous scrap for quality steel production would be produced.

To address the issue of collecting such end of life products for increasing scrap generation in India and also to structure the informal recycling sector based on environmental and scientific fronts, a hub and the spoke model has been promulgated.

The collection /dismantling center and/or scrap processing center must issue a certificate of destruction (COD) or proof of scrappage to the owner. Records of the same must be maintained and it should be available for scrutiny by the authority concerned.

The collection and/or dismantling center should either setup by or be associated with a scrap processing center. They should handover the depolluted/dismantled ELVs, white goods and other scraps without any legal liabilities or encumbrances to the authorized scrap processing center.

These centres would be set up near highways, industrial corridors, railway sidings and in the close proximity to the Sagarmala project which would help in development of multimodal logistics parks.

The increased production of vehicles and increased use of consumer durable white goods in the last two decades and their rapid obsolescence shall generate large quantities of end of life products. This shall result in generation of continuous flow of large ferrous scrap for recycling in steel production.

It would be put in place a mechanism for treating waste streams and residues produced from dismantling and shredding facilities in compliance to Hazardous & Other Wastes (Management & Transboundary Movement) Rules, 2016 issued by the ministry of environment.

An inter-ministerial coordination committee has been set up with steel secretary as convener and secretaries of ministry of road transport and highways, department of heavy industry, ministry of environment, forest & climate change, department of revenue and ministry of labour & employment as members. The mandate of the committee is to look into policy changes required for creating an organized steel scrapping ecosystem.  

A government statement said the availability of scrap was a major issue in India and the deficit was 7 million tonne in 2017. This was imported at the cost of more than Rs 24,500 crore in 2017-18. The gap between demand and supply is can be reduced in the future and the country may be self-sufficient by 2030. This is mainly because with the increase in consumption of steel in the recent past and ELVs, the generation of scrap is likely to be increased considerably. This scrap has to be channelized so that the same can be utilized for steel production in an environmentally friendly manner.

The scrapping policy seeks to ensure availability of quality scrap for the steel industry. The current supply of scrap is 25 MT from the domestic unorganized scrap industry and 7 MT from import of scrap. There is potential to harness this 7 MT of scrap that is currently being imported from the domestic market itself. This shall require adequate collection centres, dismantling centres shall work in a hub-spoke model and feed to the scrap processing centres. To produce 7 MT more of scrap, the country shall require 70 scrap processing centres each with the capacity of 100,000 tonnes; this is without disturbing the existing dismantling centres. The 70 scrap processing centres shall require about 300 collections and dismantling centres on the presumption that 4 collecting and dismantling centres cater to scrap processing centre.

A 4+1 hub and spoke model is envisaged, where four collection and dismantling centres cater to one scrap processing centre. There would be 70 units producing a total of 7 MT of scrap the potential for employment generation would be of 2,800 persons.