Vehicle Scrapping Policy

Background

• It is also known as Voluntary Vehicle-Fleet Modernization Program. India has 51 lakh Light Motor Vehicles which are older than 20 years and 34 lakh Light Motor Vehicles which are older than 15 years.
• Around 17 lakh Medium and Heavy Commercial Vehicles are older than 15 years without valid fitness certificate.
• Older vehicles pollute the environment 10 to 12 times more than fit vehicles and pose a risk to road safety.
• The policy is aimed at creating an Eco-System for phasing out of Unfit and Polluting Vehicles.
• The objectives of the policy are to reduce population of old and defective vehicles, achieve 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 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.
• The criteria for a vehicle to be scrapped is primarily based on the fitness of vehicles through Automated Fitness Centres in case of commercial vehicles and Non-Renewal of Registration in case of private vehicles.
• The criteria has been adapted from international best practices after a comparative study of standards from various countries like Germany, UK, USA and Japan.
• A Vehicle failing the fitness test or failing to get a renewal of its registration certificate may be declared as End of Life Vehicle.
• 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.

Features of the Policy

• It is proposed that commercial vehicles be de-registered after 15 years in case of failure to get the fitness certificate.
• As a disincentive measure, increased fees for fitness certificate and fitness test may be applicable for commercial vehicles 15 year onwards from the date of initial registration.
• It is proposed that Private Vehicles be de-registered after 20 years if found unfit or in case of a failure to renew registration certificate.
• As a disincentive measure, increased re-registration fees will be applicable for private vehicles 15 year onwards from the date of initial registration.
• It is being proposed that all vehicles of the Central Government, State Government, Municipal Corporation, 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.
• The scheme shall 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:
  1. Scrap Value for the old vehicle given by the scrapping centre, which is approximately 4-6% of ex-showroom price of a new vehicle.
  2. The state governments may be advised to offer a road- tax rebate of up to 25% for personal vehicles and up to 15% for commercial vehicles.
  3. The vehicle manufacturers are also advised for providing a discount of 5% on purchase of new vehicle against the scrapping certificate.
  4. In addition, the registration fees may also be waived for the purchase of new vehicle against the scrapping certificate.
• The Ministry of Road Transport and Highways will promote the setting up of Registered Vehicle Scrapping Facility (RVSF) 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, where it is being planned to develop a highly specialized centre for scrapping among many other potential centres, where different scrapping technologies can be synergized together.
• With a simplified registration process through 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 facility, de-pollution equipments for air, water and sound pollution and adequate facilities for hazardous waste management and disposal.
• Similarly, the Ministry shall promote setting up of Automated Fitness Centres on a PPP model by the state government, private-sector, automobile companies etc
• These centres may 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 test reports shall also be generated in an electronic mode.

Analysis

• When the scrappage policy was on the drawing board last year, Road Transport Minister Nitin Gadkari envisioned a reduction in automobile prices of 20% to 30%, driven by recovery of scrap steel, aluminium and plastic, all of which would be recycled.
• Now that he has a better-scoped plan, the focus must be on building capacities in the organised sector to manage the task of efficient materials recovery.
• Provisions will have to be built in to see that the sudden demand stimulus available to the auto industry does not disadvantage consumers, particularly those selling junk vehicles.
• The vehicle registration database for all States also requires updating, to reflect true numbers of old vehicles on the road, eliminating those scrapped; a significant number, more than 15 years old, still runs. Such data will help target scrappage policy benefits better.
• Moreover, many transport vehicles are operated by small entrepreneurs who lack the resources to transition to newer ones and need help as loans and grants.
• India’s policy to eliminate polluting fuel guzzlers has had a long gestation, and States should see the value of operationalising it as planned.
• New vehicles and cleaner fuels should help clear the toxic air in cities and towns and make roads safer