SIAM welcomes vehicle scrappage policy draft

It looks like the much-awaited Vehicle Scrappage Policy is to see the light of day soon. Apex industry body Society of Indian Automobile Manufacturers (SIAM) has welcomed the draft guidelines released by the Ministry of Road Transport & Highways (MoRTH) for setting up of authorised vehicle scrappage facilities in the country.

Vehicle scrappage essentially gets rid of old, polluting vehicles on road. Adopted by a number of developed markets, a vehicle scrappage policy is usually mandated by a government to accelerate the replacement of old, polluting vehicles by new vehicles. Such a policy also enables dual gains — stimulating the domestic automobile and automotive industry and importantly, removing inefficient, polluting vehicles from the road, paving the way for greener motoring and cleaner air.  

As per  government estimates, over 28 million end-of-life vehicles or ELVs (older than March 31, 2005) across categories will be ready to be discarded by April 2020. This would translate into a massive opportunity for players in the organised scrappage and recycling industry. 

The Indian automobile industry, which is currently weathering one of the worst downturns in its history, has been urging the government to introduce a vehicle scrappage policy since several months now. Typically, a scrappage policy will also incentivise owners of old vehicles to dispose them off in a proper manner. 

Rajan Wadhera, president, SIAM said: “The automobile industry wholeheartedly supports the vehicle scrappage initiative of the government of India. The draft guidelines will help in establishing organised vehicle scrapping facilities in the country and will lead to increase in the latent demand for end-of-life vehicles available for scrapping. Such facilities will operate in an environmentally friendly manner having essential infrastructure and necessary compliances / approvals from government departments. Vehicle Scrappage initiative of the government will not only help in removing old and polluting vehicles from roads, but will also increase the demand for new vehicles having better emission technology, meeting superior safety standards and at the same time lead to savings of fuel, foreign exchange and raw material.”

The apex body head said that the automobile industry keenly awaits an incentive-based vehicle scrappage policy also from the government, which will help fleet modernisation on a regular basis.

Yesterday, at Bajaj Auto's reveal of the all-electric Chetan, Transport Minister Nitin Gadkari said: “We are looking to reduce production costs by reducing logistics and power costs, which will help India become globally competitive. The scrappage policy is coming soon and with it global scrap will come here for recycling.”