- India finally got its formal vehicle scrappage policy well, somewhat. The point is that now that it is here, lots of people from different sections of the industry have opinions and takes on India’s vehicle scrappage policy.
- The much-awaited vehicle scrappage policy announced by the Transport Ministry, coming after the move for a green tax on ageing and polluting automobiles, promises economic benefits, a cleaner environment and thousands of jobs.
- Although it will take until April 1, 2022 for vehicles belonging to the government and the public sector to be scrapped, another year thereafter to identify junk heavy commercial vehicles through mandatory fitness checks, and finally other vehicles by 2024, it is a constructive road map.
- It will be no easy task, however, to put in place a credible system of automated fitness checking centres with help from States to assess whether commercial and private vehicles are roadworthy after 15 and 20 years, respectively, as the policy envisages.
- So far, it seemed pretty much everyone was largely satisfied with how the policy was shaping out to be, but it turns out there’s at least one section that isn’t entirely keen on it.
Need for introduction of vehicle scrappage policy:
- Enforcement will be key to get them scrapped once they are found unfit for use and to stop them from moving to smaller towns.
- States must also come on board to provide road tax and registration concessions, while the automobile industry is expected to sweeten the deal with genuine discounts on new vehicles.
- Transport Minister, who has had limited success with enforcement of the amended Motor Vehicles Act of 2019 because States are not entirely on board, has the difficult task of ensuring that the scrappage plan gets their support, and the backing of manufacturers who stand to benefit from a spurt in demand.
- Heavy commercial vehicles, which contribute disproportionately to pollution 1.7 million lack fitness certificates pose the biggest challenge.
- Many of these cannot be replaced quickly in the absence of financial arrangements for small operators, who have opposed the new measures.
Need for boosting automobile production in the country:
- The industry’s share pre-COVID-19 was about 7.5% of GDP with significant downstream employment, but it also imposes a fuel import burden.
- The Centre has to arrive at a balance and have incentives that reward manufacturers of vehicles that are the most fuel-efficient.
- Failure to prioritise fuel efficiency and mandate even higher standards and enhance taxes on fuel guzzlers will only repeat the mistakes of vehicle exchange programmes abroad, where full environmental benefits could not be realised, and taxpayers ended up subsidising inefficiency.
- According to CARE Ratings, the policy expected to be a ‘win-win’ for all as it helps reduce India’s oil import bill by improving fuel efficiency, reduce environmental pollution and improve road and vehicular safety by getting rid of old and defective vehicles, boost the availability of low-cost raw materials like plastic, steel, aluminium, steel, rubber, electronics, etc.
Concerns so far analysed from vehicle scrappage policy:
- The country’s trucking industry is, in fact, opposed to the policy, saying it will exert exceptional strain on the trucking industry. An IANS report notes industry experts believe the new policy will cause a lot of truck driver-owners to go out of business.
- The scrappage industry may provide incentives for scrapping older vehicle (like recovery of scrap, steel etc.). The government is not a direct beneficiary except the environmental cost. Thus, providing incentives from public money might not be feasible.
- In rural areas, old vehicles are being used as the owners have very limited financial resources to purchase new vehicles.
- Scrapping capacity of India is in doubt. India so far has only one government-authorized scrappage workshop in Greater Noida.
- Also, the government do not have any standard operating procedures (SOP) for setting up of vehicle scrapping centres.
- Formulating a policy without having the capacity will lead to accumulation of old vehicles like solid wastes.
- Regulation of pollutants released during scrapping. The scrapping of Vehicle will release toxic metals like mercury, lead, cadmium or hexavalent chromium.
- If not properly regulated, it will pollute the environment and have long-lasting consequences.
The Scrappage policy has the potential to meet the government-set target of 30-40 percent electrification of the vehicle fleet by 2030.
But it can be sustainable only when the government provide adequate support to Electric Vehicles such as by creating the necessary infrastructure for charging, manufacturing battery packs etc.
The scrappage scheme should incentivise replacement of old vehicles with EVs. On the other hand, the government should also frame a policy to reduce the purchasing of traditional petroleum-powered vehicles.
In the Electric Vehicle Policy of the Delhi government, they linked scrappage incentives with buying of electric vehicles. Such a special linkage of policy is necessary at the national level to promote the electric vehicle.
Ecological scrapping, as a concept, must lead to high rates of materials recovery, reduce air pollution, mining and pressure on the environment.
Vehicle scrappage and replacement is seen internationally as a route to rejuvenate COVID-19-affected economies by privileging green technologies, notably electric vehicles (EVs).
It is also can be seen as an initiative to achieve net zero emissions by mid-century under Paris Agreement commitments. India’s automobile ecosystem is complex, with dominant, legacy motors spanning fossil-fuel driven vehicles and a nascent EV segment.