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50-70 vehicle scrapping facilities to be set up in India in next 5 years

Around 50-70 registered vehicle scrapping facilities (RVSFs) will be set up across India during the next 5 years to cater to the expected demand for scrapping of unfit vehicles in a safe manner.


50-70 vehicle scrapping facilities in India to be set up in next 5 years p

As is known, the Mahindra Group set up their Cero Recycling plant, which began vehicle scrappage and recycling a few years ago. In November 2021, Maruti Suzuki Toyotsu commenced vehicle dismantling and recycling operations in Noida, Uttar Pradesh. It has a scrapping capacity of 2,000 units a month, or 24,000 units annually. And in December 2021, Tata Motors signed a Memorandum of Understanding (MoU) with the Government of Maharashtra to set up a scrappage facility.

A National Conference on “Investment Opportunities in Highways, Transport and Logistics” was held in Mumbai in December 2021, under the chairpersonship of Union Minister for Road Transport and Highways Shri Nitin Gadkari. It highlighted investment opportunities in highways, transport and logistics sector, including that of the Vehicle Scrapping Policy.

The Conference informed investors about the attractive investment opportunity which the government’s vehicle scrapping policy heralds. The Voluntary Vehicle-Fleet Modernization Policy aims to create an ecosystem for phasing out of unfit and polluting vehicles. The policy aims to reduce pollution by scrapping more than 1 crore unfit vehicles, improve road and passenger safety, boost auto sales, improve fuel efficiency, formalise the scrappage industry and boost the availability of low-cost materials for the industry. 

Out of the more than 1 crore (one million) vehicles to be scrapped, around 5.8 lakh (580,000) vehicles are registered in the state of Maharashtra.

Under the policy, around 50-70 registered vehicle scrapping facilities (RVSFs) will be set up across the country during the next 5 years to cater to the expected demand for scrapping of unfit vehicles in a safe manner. The comprehensive infrastructure being set up will also increase value extraction from around 70 percent at present to 90-95 percent.

Speaking about the transformation the policy will usher in, the Union Minister said that vehicle scrapping policy will reduce pollution, improve tax revenues, grow the automobile sector, boost exports and create jobs. It is a win-win situation, in which investment on a high scale can come in, he said.

Ajay Kumar Bhalla, Union Home Secretary highlighted the importance of automobile scrappage policy for the nation: 

“Auto scrappage carries great importance in our economy, especially for India, which requires certain metals which are not domestically available. Our aim is to make scrappage centres viable by bringing a mandate that unfit vehicles have to be scrapped. This policy will also help auto scrappage facilities established with support of state governments, in earning revenue and being viable.”

To make the policy citizen-centric, voluntary scrapping is being targeted, based strictly on fitness, irrespective of the age of the vehicle. If a vehicle fails an automated fitness test, one re-test after the necessary repair/rectification, and the re-inspection if ordered by the Appellate Authority, it will be declared an end-of-life vehicle (ELV).

Automated vehicle testing will be initiated for heavy commercial vehicles, from 1st April 2023; for other classes, it will be mandated in phases, beginning from 1st June 2024. 75 stations have been proposed to be set up in the next 4-5 years; this is to be scaled to 450-500 stations across India.

The Government will take the lead in implementing vehicle modernization policy by introducing Mandatory scrapping of government vehicles older than 15 years, to be effective from 1st October 2022.

While speaking about vehicle scrapping policy, Mohammad Athar, Lead, Economic Development and Infrastructure, PwC said that several measures have been taken to encourage owners of end-of-life vehicles to scrap their vehicles. He informed that several measures have been taken to make the scrapping process seamless for scrapping facility operators. A single-window system for registration of scrapping facilities and testing stations has been launched, on the National Single Window System (NSWS) of the Department for Promotion of Industry and Internal Trade (DPIIT).

It was informed that the facilities and testing stations together present an investment opportunity of 230 – 280 crore rupees for the state of Maharashtra alone.

Speaking about the implementation of the policy in the state, Principal Secretary, Transport, Govt. of Maharashtra, Shri Ashish Kumar Singh said that the Draft Voluntary Vehicle Scrapping Policy of the state too is being made. He said:

“This will offer incentives for scrappage. We hope that with the new policy of Government of India and with the announcement of the state policy, vehicle owners will come forward, scrap vehicles and shift to electric vehicles.”

He also hoped that electric vehicle manufacturers will also come forward and set up vehicle scrappage centres, given the direct linkage between scrappage and conversion to electric vehicles.

Sushant Naik, CII representative and Global Head – Govt. and Public Affairs, Tata Motors stated that the vehicle scrapping policy is a panacea that will create jobs and strengthen the transport sector. The policy will make the sector conducive for innovation and help unlock the sector’s potential; it is an immense opportunity, which will create value for all stakeholders and energize our auto sector.