The National Automobile Scrappage Policy, launched on August 13, 2021 was proposed in the annual budget for 2021–22. It dictates that all automobiles over a certain age should be off the roads in the interest of better pollution control and safety, which new vehicles ensure. Recycling them will reduce the cost of manufacturing.
Therefore, the policy aims to reduce a number 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; formalise the currently informal vehicle scrapping industry; and boost availability of low-cost raw materials for automotive, steel, and electronics industry.
Proposals of the Policy
- Private vehicles will be de-registered after 20 years if found unfit after undergoing fitness test or in case of failure to renew registration certificate. Enhanced re-registration fees will be applicable on private vehicles from the 15th year onwards from the date of original registration.
- Vehicles belonging to 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.
- In case of commercial vehicles, failure to get a fitness certificate after undergoing fitness test, will lead to their deregistration after 15 years.
- The registration fee is proposed to be hiked steeply for both private and commercial vehicles so as to discourage the use of old vehicles. The fee is proposed to be hiked around eight times for personal vehicles and around 20 times for commercial vehicles. It means that if an old personal vehicle passes the fitness test, the owner can continue to use it by paying a much steeper charges for registration. These charges will be applicable from October 2021.
- Keeping old vehicles may invite further charges. Transport vehicles older than eight years could be charged ‘green tax’ at the rate of 10 to 25 per cent of road tax. The states may levy an additional green tax hike in re-registration fee for private vehicles after 15 years, public transport vehicles and commercial vehicles. Though public transport vehicles will be charged lower green taxes, vehicles registered in highly polluted cities would be charged up to 50 per cent of road tax. If vehicles fail an automated fitness test, they will be deregistered automatically. They will be declared as End-of-life vehicles (ELVs) and will be scrapped. As an estimate, commercial vehicles constitute about 5 per cent of the total vehicle fleet and contribute about 65–70 per cent of vehicular pollution. However, vehicles manufactured before 2000 constitute one per cent but contributes 15 per cent of pollution. Older vehicles are 10–25 times more polluting compared to modern vehicles.
- Strong hybrids, electric vehicles, agricultural vehicles like tractors and harvesters, vehicles using alternative fuels such as CNG, ethanol, and LPG would be exempted from the scrappage policy.
- The policy proposes strong incentives for scrapping old vehicles and buying new ones like 5 per cent discount by vehicle manufacturers for buying new vehicles, up to 25 per cent and 15 per cent rebate on road tax for personal and commercial vehicles respectively, and zero registration fee for new vehicle purchased on producing the vehicle scrapping certificate of old vehicle. The scrapping certificate is tradable, i.e., it can be used by any one and not necessarily by the owner of the scrapped vehicle.
Implementation of Policy
In order to implement the policy, the government needs to establish an infrastructure for testing and scrapping centres rapidly across the country. To declare a vehicle unfit, automated fitness centres would be established along with scrapping yards. These centres will have tracks and equipment suitable to test for various criteria such as emission norms, braking and other parameters, without human intervention. Model inspection and certification centres will also be set up in all states on public private partnership (PPP) model including state government, private sector, automobile companies, etc. To avoid conflict of interest, operators of fitness centres shall only provide testing facility and no repair, sale or spare services.
Presently, India has seven automated fitness test centres and two authorised scrappage centres. The Society of Indian Automobile Manufacturers (SIAM) is working with the government to create infrastructure for vehicle scrappage and testing in all states and union territories. Along, the world’s biggest ship-breaking yard in Gujarat has been identified for establishing a highly specialised scrapping centre. The scrapping centres should have adequate parking facility, de-pollution equipment for air, water, and sound pollution and adequate facilities for hazardous waste management and disposal.
Benefits
Phasing out old and unfit vehicles and modernising the vehicle fleet in the country will help in the economic development. As per the Ministry of Road Transport and Highways, the policy will likely increase India’s automobile industry turnover to 10 lakh crore from the current 4.5 lakh crore and create 35,000 jobs with an additional investment of 10,000 crore. Automobile sales will increase following the new policy, which will add 30–40 thousand crore in GST collections of Centre and states.
According to the data of Ministry of Road Transport and Highways, India has 51 lakh motor vehicles which are more than 20 years old and 34 lakh over 15 years old. Around 17 lakh medium and heavy commercial vehicles are older than 15 years without having a valid fitness certificate. Therefore, the policy will act as a booster for the weakening Indian auto industry. It will also create an eco-system of clean environment ensuring rider and pedestrian safety.
It has been suggested that one of the prime benefits of the policy is ‘creating a circular economy’ in which products, materials, equipment, and infrastructure are kept in use for longer, thus improving productivity. Such an economy is based on reuse, sharing, repair, refurbishment, remanufacturing, and recycling of resources to create closed-loop system, minimising the use of resources, generation of waste, pollution, and carbon emission. When a vehicle is scrapped, many of its parts can be refurbished and made useful again.
International Scenario
Globally, a scrappage policy has been followed by boost in demand in the auto manufacturing sector, especially in Europe and the US. This has also been proved effective to deal with economic slowdown in the manufacturing sector and consumption due to recession. Countries such as the US, Canada, Germany, and China have introduced vehicle scrappage policies to boost their automotive industries and keep vehicular pollution in check. The US has implemented the car allowance rebate system (CARS), also known as cash for clunkers programme that offers credit incentives on scrapping older vehicles and replacing them with new and more fuel-efficient vehicles.
Critical Analysis
The policy is good as for its aim and objectives are concerned. Undoubtedly, it will help mitigate pollution and climate change, save life, and boost the development of the country. However, certain bottlenecks like improper implementation or corruption may devoid it of its usefulness and long-term benefits. Therefore, the implementing agencies should come out with crystal clear regulations with no room for any loopholes.
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