Narendra Modi launches Vehicle Scrappage Policy, here's what will change for old automobiles

Prime Minister Narendra Modi launched the Vehicle Scrappage Policy on Friday calling it “a significant milestone in India’s development journey”. In a series of tweets, the Prime Minister said, “The launch of Vehicle Scrappage Policy today is a significant milestone in India’s development journey. The Investor Summit in Gujarat for setting up vehicle scrapping infrastructure opens a new range of possibilities. I would request our youth & start-ups to join this programme. “Vehicle scrapping will help phase out unfit & polluting vehicles in an environment-friendly manner. Our aim is to create a viable #circulareconomy & bring value for all stakeholders while being environmentally responsible.”

Launching National Automobile Scrappage Policy #CircularEconomy https://t.co/JL7EAZ5BNL

— Narendra Modi (@narendramodi) August 13, 2021

Why is it needed? More than 51 lakh old vehicles spewing fumes on Indian roads On 18 March 2021, Minister for Road Transport and Highways Nitin Gadkari had made a suo motu statement in the Parliament on the Vehicle Scrapping Policy. He had revealed that India has 51 lakh Light Motor Vehicles that are older than 20 years and 34 lakh Light Motor Vehicles that are older than 15 years. Around 17 lakh Medium and Heavy Commercial Vehicles are older than 15 years without valid fitness certificates.

Older vehicles pollute the environment 10 to 12 times more than fit vehicles and pose a risk to road safety.

In the interest of a clean environment and rider and pedestrian safety, the Ministry of Road Transport and Highways came with the Voluntary Vehicle-Fleet Modernisation Program or Vehicle Scrapping Policy which is aimed at creating an ecosystem for phasing out of unfit and polluting vehicles. What are its objectives? The objectives of the policy are to reduce the number of old and defective vehicles, achieve a reduction in vehicular air pollutants to fulfil India’s climate commitments, improve road and vehicular safety, achieve better fuel efficiency, formalize the currently informal vehicle scrapping industry and boost the availability of low-cost raw materials for automotive, steel and electronics industry. The ecosystem is expected to attract additional investments of around Rs 10,000 crore and 35,000 job opportunities. When will the scrapping policy come into force? The tentative timeline for application of the Proposed Scrapping Policy is as follows:

• Rules for fitness tests and scrapping centres: 1 October 2021
• Scrapping of government and PSU vehicles above 15 years of age: 1 April 2022
• Mandatory fitness testing for heavy commercial vehicles: 1 April 2023
• Mandatory fitness-testing (Phased manner for other categories): 1 June 2024

What’re the criteria for the scrapping of vehicles?

• For Commercial Vehicle

The criteria for a commercial vehicle to be scrapped is primarily based on the fitness of vehicles, which will be determined through Automated Fitness Centres. Commercial vehicles are likely to be de-registered after 15 years in case the owner fails to obtain a fitness certificate. Furthermore, to disincentivise using old vehicles, the owners will have to pay a higher fee for fitness certificates and additional fitness tests may be applicable for commercial vehicles after 15 year from the date of initial registration. Criteria to determine vehicle fitness will be primarily emission tests, braking, safety equipment among many other tests which are as per the Central Motor Vehicle Rules, 1989. The criteria have been adapted from international best practices after a comparative study of standards from various countries like Germany, UK, USA and Japan. The policy mentions that all vehicles of the Central government, state governments, municipal corporations, panchayats, state transport undertakings, public sector undertakings and autonomous bodies with the Union and state governments may be de-registered and scrapped after 15 years from the date of registration.

• For Private Vehicle

The private vehicles will be de-registered after 20 years if found unfit or in case of a failure to renew the registration certificate. As a disincentive measure, increased re-registration fees will be applicable for private vehicles after 15 years onwards from the date of initial registration. Registered scrapping facilities, fitness centres to be set up The Ministry of Road Transport and Highways will also promote the setting up of Registered Vehicle Scrapping Facility across India and will encourage public and private participation for opening up of such centres. Efforts are also being made to set up Integrated Scrapping Facilities across India. Some of the identified places include Alang in Gujarat. The government plans to develop a highly specialised centre for scrapping, where different scrapping technologies can be synergized together. With a simplified registration process through a single window, the scrapping facility shall have to comply with environmental and pollution norms and with all applicable acts of law. It shall be ensured that the scrapping centres have adequate parking facilities, de-pollution equipment for air, water and sound pollution and adequate facilities for hazardous waste management and disposal. Similarly, the ministry will also promote the setting up of Automated Fitness Centres on a PPP model by the state government, private sector and automobile companies. These centres will need to have adequate space for test-lane, IT servers, parking and free movement of vehicles. To avoid conflict of interest, operators of fitness centres shall only provide testing facilities and shall not provide repair/sale of spare services. Appointments for fitness centres may be booked online and tests reports shall also be generated in an electronic mode. What does it mean for old vehicle owners? The scheme is likely to provide strong incentives to owners of old vehicles to scrap old and unfit vehicles through registered scrapping centres, which shall provide the owners with a scrapping certificate. Some of these incentives include:

• Scrap Value for the old vehicle given by the scrapping centre, which is approximately 4-6 percent of the ex-showroom price of a new vehicle.
• The state governments may be advised to offer a road tax rebate of up to 25 personal for personal vehicles and up to 15 percent for commercial vehicles
• The vehicle manufacturers are also advised for providing a discount of 5 percent on purchase of new vehicle against the scrapping certificate
• In addition, the registration fees may also be waived for the purchase of new vehicle against the scrapping certificate

With inputs from PTI