Vehicle Scrappage Policy expected to bring in Rs 10,000 crore investment

by Shahkar Abidi 13 Aug 2021

The Vehicle Scrappage Policy was launched by Prime Minister, Narendra Modi at the Investor Summit in Gujarat and is expected to bring in investments of close to Rs 10,000 crore and generate 35,000 job opportunities.

In a series of tweets, the Prime Minister said the launch, “opens a new range of possibilities. I would request our youth & start-ups to join this programme. Vehicle scrapping will help phase out unfit and polluting vehicles in an environment friendly manner. Our aim is to create a viable circular economy & bring value for all stakeholders while being environmentally responsible."

Minister of Road Transport & Highways Nitin Gadkari added that the, “Automobile industry is the highest revenue-producing sector which also contributes to the employment of a large number of people in the country; Government is looking forward to provide all needed support to make this industry.”

The Government of Gujarat signed six Memorandum of Understanding (MoUs) with CERO Recycling, Tata Motors, CMR- Kataria Recycling, Modest Infrastructure, Mascot Engitech and Mono Steel. Another MoU was also signed between Assam Government and SM Group from Assam. 

The Prime MInister highlighted that under the new policy, vehicles will not be scrapped merely on the basis of age and clarified that “Vehicles will be scientifically tested through authorised, automated testing centres. Unfit vehicles will be scrapped scientifically. It will ensure that registered vehicle scrapping facilities all over the counties are technology driven and transparent”. Reiterating the importance of scientific scrapping, the PM added that "Auto and metal industry will get a big boost from this program. Last year alone, we had to import scrap steel worth about Rs 23,000 crore. Because the scrapping that happens in India till now is not productive. Energy recovery is negligible, high-strength steel alloys are not fully valued, and precious metals cannot be recovered. Now when there is a scientific, technology based scrapping, we will be able to recover even rare earth metals." 

He further highlighted the long-term benefits of the Vehicle Scrappage Policy, "Normal families will benefit greatly from this policy in every way. The first advantage will be that a certificate will be given on scrapping the old vehicle. The person who has this certificate will not have to pay any money for registration on the purchase of a new vehicle. Along with this, he will also be given some exemption in road tax. The second benefit will be that the maintenance cost, repair cost, fuel efficiency of the old vehicle will also be saved in this. The third benefit is directly related to life. Due to old vehicles, old technology, the risk of road accident is very high, it will get rid of it. Fourth, it will also reduce the impact of pollution on our health."

According to estimates by the Ministry of Road Transport and Highways, India has a little over five million light motor vehicles which are older than 20 years and another 3.4 million of over 15 years. Additionally, 1.7 million M&HCVs which are older than 15 years continue to operate without a valid fitness certificate.

However, at present there are only seven automated fitness test centres and two authorised scrappage centres. 

Industry welcomes move
Venkatram Mamillapalle, country CEO and MD, Renault India Operations: “The move by the Prime Minister in launching the Vehicle Scrappage Policy is a welcome move, after the initial policy was formulated in March 2021 and shall support the auto industry of the new age ‘Bharat’. This scrappage policy will provide the much-needed impetus in countering the old methods of scrapping material, which were counterproductive. The new policy was an imperative, long awaited and will support the automobile industry and the ancillary support industry creating a win-win for all. The framework will augur greater investments and significantly prune the raw material cost and will support refurbishment of sheet metal recycling. The scrappage policy is a panacea that will provide the right propulsion in form of generating employment in the auto ancillary/scrappage space and make the sector more organised.”

“The scrappage policy is in many ways a significant epoch in the developmental milestone of the Indian auto industry as it is a clarion call for start-ups promoting the ‘Aatmanirbhar Bharat’ vision of the Prime Minister. The infrastructure that will be developed to support the policy will make India an auto hub in the near future with automated testing stations and registered vehicle scrapping facilities across the country. With the Covid-19 pandemic slowly losing battle against the indomitable spirit of the people of India and resilience and optimism that prevails in the overall economic scenario, the scrappage policy will mandatorily encourage recyclability and production of newer vehicles to replace those that are unfit and causing pollution in a scientific and amicable manner.”

Uday Narang, chairman and founder, Omega Seiki Mobility: “The vehicle Scrappage policy by the Central Government is a significant step towards Atmanirbhar Bharat and will put India on the Map. The incentives announced by the government will not only help in removing unfit vehicles on the roads but also help in recycling, creating new job opportunities and above all it will prove to be a sustainable solution for the ongoing wrong practises of vehicle material scrappage. From buying a vehicle to its last stage of scrapping all the components (Life cycle of the vehicle) should be carried out in an organised manner. The scrappage policy is a perfect solution that will make the auto sector more organised.”  

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