Vehicle Scrappage policy soon,says Gadkari: What it means

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The vehicle scrappage policy is likely to be finalised soon to boost the automobile sector, Union Minister Nitin Gadkari said on Thursday.

The road transport and highways minister also said that his ministry has fixed a target to build highways worth Rs 15 lakh crore in the next two years.

The vehicle scrappage policy currently awaits a clearance from the Finance Ministry and Gadkari, in a video conference with Society of Indian Automobile Manufacturers (SIAM), said he is confident that all creases would be ironed out in a speedy manner. "I have been trying to pursue the scrapping policy for the last two years. We need cooperation from other ministries, stakeholders. Have told the secretary to follow it up as soon as possible. This is one of the steps to boost the industry," he said.

What is Vehicle Scrappage Policy?

A scrappage program is a government budget programme to promote the replacement of old vehicles with modern vehicles. Scrappage programmes generally have the dual aim of stimulating the automobile industry and removing inefficient, more polluting vehicles from the road.

Why is it Needed?

According to a Central Pollution Control Board (CPCB) study, there are about nine million vehicles plying on Indian roads that are more than 15-years old and often emit 10 times more tailpipe emission than the current norms. Even though the recent BS-VI emission norms are expected to lead the greenway, this number is anticipated to reach 20 million by as early as 2025.

An HDFC Bank study has estimated the market for vehicle scrappage and recycling at $6 billion.Studies also say that scrappage can take 28 million polluting vehicles (mainly two-wheelers) off the roads, helping curb pollution in a massive way. Implementing the scheme for trucks and buses can bring down CO emissions by 17 percent, HC+NOx emissions by 18 percent and PM emissions by 24 percent.

Was scrappage not being done in India yet?

Vehicle scrappage has occupied the pockets of unorganised sector in India for the longest time. With availability of cheap vehicle parts, Delhi’s Mayapuri is home to the largest scrap market in Asia. This popularity is also enjoyed by similar markets of Kurla in Mumbai, Shivajinagar in Bengaluru and Pudupet in Chennai.

It may be noted that the scrap market at Mayapuri, which is more like the funeral ground for the vehicles, has been so in demand that its annual turnover is estimated to be around Rs 6,000 crore. Even though there are no statistics available for the number of people employed in the market, CPCB estimates that currently, about 3,000 shops operate in the area.

Benefits of Vehicle Scrappage Policy :

  • Mr. Gadkari had earlier said that once the policy is approved, India could emerge as a hub for automobile manufacturing as key raw material available from scrapping like steel, aluminium and plastic are bound to be recycled, bringing down automobile prices by “20-30%“.
  • Incentive in form of monetary compensation for owners to get rid of such vehicles of age beyond 15 years and putting these polluting vehicles out to help the environment.
  • There could, however, be other equally important benefits like such owners then going to the market for new vehicles which could boost demand and thus Economy .

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