The vehicle scrappage policy which has been much anticipated is expected to not just pave the way for cleaner vehicles on India’s roads but also to serve as demand triggers for buying of new vehicles.
According to an article in Auto Tech Review, the Indian government’s recent announcement to issue the vehicle scrappage policy must have come as music to the ears of the automotive industry as there is a great deal of significance attached to the vehicle scrappage policy, as it will not just take older vehicles (cars, buses and trucks) off the roads but will serve as demand triggers for buying new vehicles as well as paving the way for cleaner vehicles on the Indian roads. This policy will also see a considerable amount of material recycling. It will reduce the cost of manufacturing cars, buses, and trucks; therefore, 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. She said:
“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 added: “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.”
Vinay Piparsania, Director – Automotive, Counterpoint Research, Piparsania, also underscored the importance of an effective vehicle de-registration saying:
“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 is estimated that India has 28 million vehicles which are 15 years old or more, with this in mind, the vehicle scrappage policy will stand the Indian automotive industry in good stead.
Urdhwareshe believes that scientific disposal of scrap metal holds the key saying:
“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.”
Girish Wagh, President, Commercial Vehicles Business Unit, Tata Motors, also accentuated the need for scientific disposal of scrapped vehicles. He said:
“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.”
Piparsania believes the vehicle scrapping process must be an environmentally-friendly one, saying:
“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 believes that the auto industry can explore multiple parameters before taking a call on end-of-life vehicles. He said:
“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 said:
“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.”
With reference to the scrappage centre, the ARAI Director said it is the private and informal sector that will have to take the lead. She added:
“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.”
It seems that 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.