Editorial: Challenges in automobile scrappage policy
The full potential of the initiative can be realised only if the tariffs on scrap are rationalised
Though the recently launched automobile scrappage policy is a significant milestone in the country’s journey towards an environmentally responsible economy that maximises recycling of resources, the full potential of the initiative can be realised if the tariffs on scrap are rationalised. The policy must be extended beyond the automobile sector and the import duty on scrap must be in alignment with the import duty on steel. This would incentivise an organised domestic scrap industry. Promotion of efficient public transport, running on green fuels and the nationwide distribution of better-quality automotive fuel could be the other supplementing measures to reduce pollution levels. The new policy mandates that all automobiles over a certain age should be off the roads in the interest of better pollution control and safety. Commercial vehicles over 15 years old and personal vehicles over 20 years old are marked for scrapping and will be deregistered and the owner can choose to scrap them. The scrappage policy is part of creating a circular economy that depends on reuse, repair 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, 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.
As per the official data, 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. The old and poorly maintained vehicles can become energy guzzlers and emit high amounts of heat-trapping carbon dioxide that causes global warming. They need to be phased out, but the country does not have the necessary infrastructure to either test or scrap vehicles in such large numbers. An ecosystem needs to be created wherein testing and subsequent scrapping can happen organically without the consumer facing any hassles. Apart from the fitness centres, many scrap yards would be required to carry out this massive mission. Identifying locations and obtaining green clearances for these scrapyards will be another challenging task. The scrappage industry has the potential to attract investment worth Rs 10,000 crore and create 35,000 new jobs. Globally, a scrappage policy has been followed by a 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.
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