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Sansad TV: Perspective- Vehicle Scrapping Policy

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Introduction:

All vehicles owned by central and state governments, including buses owned by transport corporations and public sector undertakings, that are older than 15 years will be de-registered and scrapped starting April 1. This has been announced by the Ministry of Road Transport & Highways through a notification. The rules, however, shall not apply to the special purpose vehicles, which include armoured and other specialised vehicles used for operational purposes for the defence of the country and for the maintenance of law and order and internal security. As per the notification, disposal of such vehicles should be ensured through the Registered Vehicle Scrapping Facility after the expiry of the fifteen years from the date of initial registration of the vehicle. Announced in the Union Budget 2021-22, the policy provides for fitness tests after 20 years for personal vehicles, while commercial vehicles will require it after 15 years. States and Union Territories will provide up to 25% tax rebate on road tax for vehicles that are purchased after scrapping old vehicles.

Vehicle Scrappage Policy:

  • Old vehicles will have to pass a fitness test before re-registration and as per the policy government commercial vehicles more than 15 years old and private vehicles which are over 20 years old will be scrapped.
  • As a disincentive, increased re-registration fees would be applicable for vehicles 15 years or older from the initial date registration.
  • The state governments may be advised to offer a road-tax rebate of up to 25% for personal vehicles and up to 15% for commercial vehicles to provide incentive to owners of old vehicles to scrap old and unfit vehicles.

Need for introduction of vehicle scrappage policy:

  • Enforcement will be key to get them scrapped once they are found unfit for use and to stop them from moving to smaller towns.
  • States must also come on board to provide road tax and registration concessions, while the automobile industry is expected to sweeten the deal with genuine discounts on new vehicles.
  • Transport Minister, who has had limited success with enforcement of the amended Motor Vehicles Act of 2019 because States are not entirely on board, has the difficult task of ensuring that the scrappage plan gets their support, and the backing of manufacturers who stand to benefit from a spurt in demand.
  • Heavy commercial vehicles, which contribute disproportionately to pollution 1.7 million lack fitness certificates pose the biggest challenge.
  • Many of these cannot be replaced quickly in the absence of financial arrangements for small operators, who have opposed the new measures.

Significance:

  • The vehicle scrapping policy is aimed at creating an eco-system for phasing out unfit and polluting vehicles in an environmentally friendly and safe manner.
  • The initiative will promote a circular economy and make the process of economic development more sustainable and environment friendly.
  • The policy will also bring in investments of around Rs 10,000 crore and create 35,000 job opportunities.

Issues:

  • Limited incentive and poor cost economics for trucks.
  • Lack of addressable volumes for other segments.
  • The potential benefit from scrapping a 15-year-old, entry-level small car will be ₹70,000, whereas its resale value is around ₹95,000. That makes scrapping unattractive.
  • Also, the government do not have any standard operating procedures (SOP) for setting up of vehicle scrapping centres.
  • Formulating a policy without having the capacity will lead to accumulation of old vehicles like solid wastes.
  • Regulation of pollutants released during scrapping. The scrapping of Vehicle will release toxic metals like mercury, lead, cadmium or hexavalent chromium.
  • If not properly regulated, it will pollute the environment and have long-lasting consequences.

Way Forward:

  • The Scrappage policy has the potential to meet the government-set target of 30-40 percent electrification of the vehicle fleet by 2030.
  • With this background, for the scrappage policy to be seamlessly implemented, we should have a comprehensive plan in terms of removing ELV (End of life vehicles) from the road. Freight transporters need stronger financial support.
  • However, that said, it is important to note that unless old fleet vehicles are off the road, the benefits of implementation of BSVI vehicles will not be fully leveraged.
  • But it can be sustainable only when the government provide adequate support to Electric Vehicles such as by creating the necessary infrastructure for charging, manufacturing battery packs etc.
  • The scrappage scheme should incentivise replacement of old vehicles with EVs. On the other hand, the government should also frame a policy to reduce the purchasing of traditional petroleum-powered vehicles.
  • In the Electric Vehicle Policy of the Delhi government, they linked scrappage incentives with buying of electric vehicles. Such a special linkage of policy is necessary at the national level to promote the electric vehicle.

Conclusion:

  • Ecological scrapping, as a concept, must lead to high rates of materials recovery, reduce air pollution, mining and pressure on the environment.
  • Vehicle scrappage and replacement is seen internationally as a route to rejuvenate COVID-19-affected economies by privileging green technologies, notably electric vehicles (EVs).
  • It is also can be seen as an initiative to achieve net zero emissions by mid-century under Paris Agreement commitments. India’s automobile ecosystem is complex, with dominant, legacy motors spanning fossil-fuel driven vehicles and a nascent EV segment.