Scrappage policy to help in removing unfit vehicles from roads: PM Modi

Prime Minister Narendra Modi on Friday formally launched the National Automobile Scrappage Policy, which he said would attract investments of about Rs 10,000 crore. The policy would also help in getting rid of unfit and polluting vehicles in a scientific manner, he said.

“The policy is an important link to achieve the circular economy of waste to wealth. It will also energise India’s auto sector and metal sector under the principles of reuse, recycle, and recover,” Modi said at a virtual investors’ summit held in Gandhinagar.

The policy is an important step forward for the environment because it would not only help reduce air pollution caused by old vehicles, but will also check the enormous damage clunkers can cause, said environmentalists.

“Retiring old, jaded vehicles is extremely essential, and this was a much-needed step,” said Sumit Sharma, director (earth science and climate change division) at The Energy Research Institute. The share of vehicular pollution in Delhi is 23 per cent, and fleet modernisation can reduce this to 16 per cent, he said.

Anumita Roychowdhury, executive director at Centre for Science and Environment, concurs. “An old BS I truck emits 36 times higher particulates compared to a BS VI truck. It is also necessary to link the replacement of personal vehicles with electric vehicles to help move towards a zero-emissions goal,” she said. 

The move, however, doesn’t bring an immediate cheer to the pandemic-bruised auto industry. The scrappage policy will take effect in a phased manner and is unlikely to propel the overall sales of cars or commercial vehicles anytime soon. Among other things, it will have to trickle down to states, which, in turn, have to implement it after ensuring availability of requisite infrastructure, said auto industry executives and analysts.

R C Bharagava, chairman at Maruti Suzuki India, lauded the move, but added its impact would not be seen in the near term. “It is impossible to assess the impact of the policy on car sales as it’s still far away. The good thing is, we now have a scrappage policy to start with,” he said.

The whole exercise of scrapping old vehicles will begin from October 1, 2021 after the rules for fitness scrapping centres are released. It will be followed by starting fitness testing for government and public sector undertaking (PSU) vehicles on April 1, 2022. The fitness testing for heavy commercial vehicles will commence on April 1, 2023. For the rest of the segments, it will begin from June 1, 2024.

Taking 1990 as the base year, at present around 3.7 million commercial vehicles and 5.2 million passenger vehicles are eligible for voluntary scrapping, said Harshwardhan Sharma, head (auto retail practice) at Nomura.

Ashish Suman, partner, J Sagar Associates, said, “The success of the policy will hinge on the state governments’ support, creation and availability of scrapyard infrastructure, collaboration between the government and corporates in developing the infrastructure, and most importantly a policy for waste management to avoid environment concerns, which was the centre theme for introducing the policy.” 

As part of the policy, the government was also looking to provide some concessions on road tax. "The families would also be able to save on costs of maintenance, repair of the vehicle with better fuel efficiency. This policy would benefit the common man in every way," Modi said in his address.

On scrap import, the PM said India imported scrap steel worth Rs 23,000 crore last year since scrapping in the country is not as productive and carries zero energy recovery. Also, the new scrappage policy recognises the workers at scrapping facilities and small businessmen, who can become agents for authorised scrapping centres.

According to Roychowdhury, the environmental damage from clunkers can be enormous. Unscientific disposal can lead to huge wastage of material that can otherwise be brought back as a resource. If dismantled properly, it is possible to recover low-cost material for the automotive, steel, and electronics industry, among others. “Strategic replacement of very old trucks and buses can reduce emissions significantly,” she said.

The auto and metal industry is set to get a big boost with the policy, which would make scrap steel available locally, said Modi. "Gujarat has witnessed the benefits of ship recycling, while it can also become a big hub of auto scrapping," he added.

India currently has 10 million cars without valid fitness parameters, thereby adding to pollution and fuel costs, said Union Transport Minister Nitin Gadkari. “Therefore, we thought of bringing a scrappage policy. Replacing old vehicles with new ones will benefit the environment by 10-12 per cent. The new scrappage policy will generate direct and indirect employment for about 50,000 people," said Gadkari.