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Daily News Analysis

Vehicle Scrappage Policy

14th August, 2021 Economy

Context:

  • Recently, Government has launched the vehicle scrappage policy.

About the Policy:

  • All automobiles over a certain age should be off the roads in the interest of better pollution control and safety, which new vehicles ensure.
  • Commercial vehicles over 15 years old and personal vehicles over 20 years old are marked for scrapping — it doesn’t matter if they run on diesel or petrol — if they fail an automated fitness test.
  • These will be deregistered; the owner can choose to scrap them but cannot use them on the road.

Implementation of these policies:

  • The government has come out with rules and specifications on what kind of Automated Fitness Centres should come up and who can set them up.
  • It has also come up with how the scrapping yards should be.
  • It will give India Inc time to come up with an ecosystem wherein testing and subsequent scrapping can happen organically without the consumer facing duress.
  • That is why mandatory testing of heavy commercial vehicles will start in April 2023, and that of other categories of vehicles — personal vehicles, for instance — will start, in a phased manner, in June 2024.

 

Targeted Vehicles:

  • India has 51 lakh light motor vehicles that 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 valid fitness certificates, according to data with the Ministry of Road Transport and Highways.

Benefits of the Policy:

  • the resultant ecosystem can attract investment worth Rs 10,000 crore and create 35,000 new jobs.
  • It will help in creating a viable circular economy and bring value for all stakeholders while being environmentally responsible.
  • It will enhance the safety of users and the passengers both.
  • 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 a tool to deal with economic slowdown in the manufacturing sector and consumption due to recession.
  • Besides, there are spelt-out benefits vis-à-vis environment since newer cars come with better emission standards and better fuel efficiency.

Benefits to the individual:

  • The government envisages that the scrappage certificate will entitle the owner with something extra, such as a tax rebate, sops, and a discount on the new car.
  • The certificate is tradable, which means it can be used by anyone and not necessarily by the owner of the scrapped vehicle.

About Fitness Centre:

  • Automated Fitness Centres will have tracks and equipment suitable to test for various criteria such as emission norms, braking and other parameters, without human intervention.
  • The Ministry has requested states to consider providing land for free for these centres.
  • Market demand will drive the number and concentration of fitness centres in an urban area.

 

About Circular Economy:

  • A circular economy depends on reuse, sharing, repair, refurbishment, remanufacturing and recycling of resources to create a closed-loop system, minimising the use of resources, generation of waste, pollution and carbon emissions.
  • When a car is scrapped, apart from metals including iron and steel, many other parts may emerge that can be refurbished and ploughed back into use. Recycled steel from scrap, even seats and plastic parts, have value in the scrap economy.
  • In a circular economy, products, materials, equipment and infrastructure are kept in use for longer, thus improving productivity.