AdministratorApr 10, 2018

What the new Scrappage Policy means

It’s been in the works for a while now. But, there’s finally movement on a policy to scrap old vehicles that contribute significantly to pollution levels.

Earlier this month, the scrappage policy initiated by the Ministry of Road Transport and Highways in 2016 in a draft titled ‘Voluntary Vehicle Fleet Modernisation Plan’ got the go ahead from the Prime Minister’s Office. The policy will now be sent to the Goods and Services Tax Council to finalize the concession and incentives to be offered to vehicle owners in exchange for scrapping their vehicles.

What does the Scrappage Policy recommend?

The original policy had recommended scrapping of commercial (heavy and light) vehicles older than 15 years. However, the new draft covers vehicles older than 20 years.

The scrappage policy will come into effect from April 1, 2020 to coincide with the implementation of the BS-VI norms.

Under the policy, vehicles bought on or before March 31, 2005 would be eligible for the incentive scheme. Fleet owners are expected to get a waiver on duties, besides the scrap value of their vehicle and discounts from manufacturers.

The policy will now go to the GST council, which will decide the extent of tax concessions to be offered by the state and central governments to compensate vehicle owners for scrapping their old fleet.

 

 

Why do we need a Scrappage Policy?

Older vehicles are not environmentally friendly and contribute substantially to vehicular pollution levels. The emissions from vehicles contribute to increases in carbon monoxide, hydrocarbons, nitrogen oxides and particulate matter in the air.

According to an analysis of data from Central Pollution Control Board and Union road ministry’s emission norms by AT Kearney, nearly 700,000 commercial vehicles bought before December 31, 2000 contribute about 15-20% of the vehicular pollution.

India has over 11 lakh MHCVs that are above 15 years old. These contribute 34 percent of the pollution. All MHCVs together – 2.5% of India’s fleet — contribute 60 percent of the air pollution.

What will happen to the scrapped vehicles?

It’s important that the scrapped vehicles be disposed of in an environmentally safe way. Currently, most of the scrap goes to large unorganized markets, where most scrap dealers pay no attention to proper disposal of hazardous waste.

Cero, a joint venture between Mahindra Accelo and MSTC Ltd, under the guidance of the Ministry of Steel (Government of India), has set up a first-of-its-kind auto shredding plant that will recycle end-of-life vehicles in an environment-friendly way.

The company uses world class equipment and processes to recycle vehicles so that there is zero damage to the environment. Steel and other materials found in automobiles are recycled and reused. Cero aims to reduce carbon footprint and is an effort towards a zero waste, zero pollution eco-system.

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