2021-04-12
Nitin Gadkari announces Vehicle Scrappage Policy in Loksabha

Nitin Gadkari announces Vehicle Scrappage Policy in Loksabha

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 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.

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