The much-anticipated vehicle scrappage policy is expected to not just pave the way for cleaner vehicles on Indian roads, but also serve as demand triggers for buying of new vehicles
The government’s recent announcement to roll out the vehicle scrappage policy must have come as music to the ears of the automotive industry. No wonder, there are huge expectations among the automotive fraternity about the roll-out of the vehicle scrappage policy – a long-standing demand of the industry. There is a great deal of significance attached to the vehicle scrappage policy, as this policy will not just take away older vehicles (cars, buses and trucks) off the roads and serve as demand triggers for buying of new vehicles as well as paving the way for cleaner vehicles on the Indian roads. More importantly, the vehicle scrappage policy will witness a significant amount of material recycling that will come in handy for the automobile industry, as it will reduce the cost of manufacturing cars, buses, and trucks; thus, enhancing the country’s competitiveness in international markets.
Rashmi Urdhwareshe, Director, Automotive Research Association of India (ARAI), said the focus must be on identifying unfit vehicles. “There must be a strong mechanism to identify truly condemnable vehicles that are unfit on the safety and emission reduction fronts and subsequently push these vehicles through the scrappage channel,” she said.
According to the ARAI Director, another key focus area is de-registration of vehicles. “I think there is a strong need for a simplified procedure for de-registration of vehicles that are going to be scrapped. A simplified de-registration process would also require the documents to move quickly and such an exercise would ensure effective scrapping of vehicles,” she pointed out.
Vinay Piparsania, Director – Automotive, Counterpoint Research, Piparsania, also underscored the importance of an effective vehicle de-registration. “When a vehicle goes to the scrapyard, all its records must show that it is responsibly de-registered. Further, a de-registered certificate is issued to a vehicle that is up for being scrapped and the scrappage centre will accept the vehicle after accepting the de-registered certificate. The vehicle can be responsibly scrapped or recycled at the scrapyard. The integration of all registration data will mark the end of life of the vehicle.”
It may be noted that India has an estimated 28 million vehicles that are more than 15 years old and in this regard the vehicle scrappage policy will stand the Indian automotive industry in good stead.
Urdhwareshe believes that scientific disposal of scrap metal holds the key. “The scrap metal must be carried out in a scientific manner. There is a material segregation process that needs to be followed as most metals used in vehicles are very useful and can be recovered – further non-metal segregation is also important. There is a separate material chain associated with it such as foam, rubber, etc - there is an automotive industry standard (AIS) adopted by all stakeholders and this standard should be deployed by scrappage centres,” she opined.
Girish Wagh, President, Commercial Vehicles Business Unit, Tata Motors, also accentuated the need for scientific disposal of scrapped vehicles. “Vehicle scrappage must be carried out in a scientific manner and not in an unorganised manner. It is important to understand that some vehicles have been around for a long time, which means we are going to handle scrap that will not be recyclable and such scrap can pose environmental concerns,” he noted.
Piparsania reckons the vehicle scrapping process must be an environmentally-friendly one. “A Kabadiwala type of treatment must be avoided at all times and the focus should be on adopting the best practices and ensuring all environmental compliances are adhered to. Vehicle dismantling must be carried out in a safe manner as things such as oils, acids, rubber need to be carefully treated so that they can be reused or disposed of in a state manner.”
Wagh feels that the auto industry can explore multiple parametres before taking a call on the end-of-life vehicles. “Restricting ourselves to the vehicle life criteria may not be enough. The number of kilometres run, how a vehicle has been used, the final vehicle condition could be some other criteria.” He added that the vehicle scrappage policy must be a well-incentivised one. “Once we have clearly defined the end-of-life parameters, the government can focus on incentivising old vehicles, thus enabling vehicle users to dispose-off their old vehicles and leverage the incentives for buying a new vehicle.”
Urdhwareshe while stopping short of commenting on what kind of fiscal incentives can be offered under the vehicle scrappage policy asserted that the larger objective of this policy is to enable cleaner vehicles on Indian roads. “I’m not so much focussed about demand creation via the vehicle scrappage policy. This policy will address the need for environmentally-friendly cleaner vehicles on Indian roads, which needs urgent attention more than demand creation,” she remarked.
On the scrappage centre front, the ARAI Director said it is the private and informal sector that will have to take the lead. “The onus is on private players to set up the approved infrastructure for the scrappage centres. The government at best can regulate this sector as well as support them with policies,” she observed.
Clearly, the vehicle scrappage policy is probably just the demand trigger the auto industry needs to get back on its growth feet following the COVID-19 induced nationwide lockdown and sustained slowdown prevailing in the market even before the outbreak of the pandemic.