PM Narendra Modi Launches Vehicle Scrappage Policy in India, to Begin from 2023
In a tweet today, Narendra Modi mentioned - “The launch of Vehicle Scrappage Policy today is a significant milestone in India’s development journey. The Investor Summit in Gujarat for setting up vehicle scrapping infrastructure opens a new range of possibilities. I would request our youth & start-ups to join this programme."
Vehicle scrapping will help phase out unfit & polluting vehicles in an environment friendly manner. Our aim is to create a viable #circulareconomy & bring value for all stakeholders while being environmentally responsible.
The government expects to generate employment for about 35,000 people at vehicle fitness centres and scrapyards and a collective investment of Rs 10,000 crore. The vehicle fitness test cost will depend on the type of vehicle. For a personal vehicle, it will cost Rs 300-400, while for a commercial vehicle it could be Rs 1,000-1,500.
“We propose to scrap vehicles, which are 15 years and over, owned by the Central and state governments by April 2022," said Giridhar Aramane, secretary in the road transport and highways ministry. “From 2023 onwards, heavy commercial vehicles need to be scrapped if they do not conform to the fitness level prescribed under the rules. For personal vehicles, we plan to implement this from June 2024 onwards."
On the other hand, the vehicle scrappage policy is likely to give a major boost to the metal recycling business, said Grant Thornton Bharat. The report also said that the policy is likely to affect major changes in the Indian automotive industry.
“Be it generating employment, reducing pollution, or accelerating demands for electric vehicles, the policy proves to be a win-win situation for the auto industry and various other stakeholders," the report said.
The policy mandates that passenger vehicles older than 15 years and commercial vehicles older than 20 years will have to be scrapped mandatorily if they fail fitness and emission tests. Moreover, the policy is likely to positively impact the sales of new cars and pave way for more opportunities for the Indian auto sector.
“One of the key opportunities that will emerge from the vehicle scrappage policy will be for the metal recycling business. It will also to an extent reduce the cost of production. Steel is a crucial component for automobile manufacturers, and its price has been growing up to almost 30 per cent in the last six months," said Saket Mehra, Partner and Automotive Sector Leader, Grant Thornton Bharat.
“If you were to recycle the material and use the same for manufacturing, to an extent the prices will get rationalised. This is one of the biggest advantages. However, to what extent the price reduction will benefit the customer remains to be seen. At least to a certain point, there would be an impact on the lowering of the cost of production."