Vehicle Scrapping Policy

#GS-2 #POLITY #GOVERNANCE #POLICIES AND INTERVENTION

Context:

The new vehicle scrappage policy would encourage larger population to replace old vehicles and will inturn boost the automobile sector also.

Importance of the Policy

  • It was proposed in the Budget 2021- 22.
  • It will be implemented in a phased manner by the Ministry of Road Transport and Highways.
  • Criteria
    • Vehicles will undergo a fitness test in automated fitness centres after 20 years in the case of personal vehicles and after 15 years in the case of commercial vehicles.
    • All government vehicles and those owned by Public Sector Undertakings (PSUs) will be de-registered after 15 years.
    • Any vehicle that fails the fitness test or does not manage the renewal of its registration certificate may be declared as an End of Life Vehicle.
  • Timeline
    • The policy will start for government vehicles from 1st April 2022.
    • Mandatory fitness testing for heavy commercial vehicles will start from 1st April 2023.
    • All other categories of vehicles, including personal vehicles, will start in phases from 1st June 2024.
  • Incentives
    • Advisories to States to give up to 25% rebate in road tax for personal vehicles and up to 15% rebate for commercial vehicles.
    • The government will also offer a waiver of registration fees on the purchase of new vehicles.
    • Advisory to automakers to offer the incentive of a 5% rebate for those who buy a new vehicle after producing a scrapping certificate.
  • Disincentive
    • Increased re-registration fees would be applicable for vehicles 15 years or older from the initial date of registration.
  • Registered Vehicle Scrapping Facility (RVSF)
    • The Ministry has issued rules for the registration procedure, powers, and the scrapping procedure to be followed by RVSFs.
    • These RVSFs shall be provided access to the VAHAN database (government’s online vehicle register) and shall be authorized to make entries regarding scrapping of the vehicle & issuance of Scrapping Certificate.
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Benefits

  • Reduction of Vehicular Pollution: The policy will encourage fuel-efficient, environment-friendly vehicles thereby reducing vehicular pollution.
  • Increase in Revenues: It will reduce oil import bills and increase the government’s revenue collection from the sale of new vehicles.
    • The automobile industry in India will see a jump in turnover to Rs. 10 lakh crore from Rs. 4.5 lakh crore.
  • Revival of Commercial Vehicle Segment: The move will revive the ailing commercial vehicle segment, which has not fully recovered from the effects of the Covid-19 pandemic. Original Equipment Manufacturers (OEMs) are benefitted more.
  • Market for Recycled Materials: The policy will pave the way for the creation of an ecosystem of vehicular scrapping facilities and a market for recycled raw materials.
  • Boost to Indian Automotive Industry: It would bring the Indian automotive industry on par with international standards, besides offering the much-needed reprieve for auto, steel and electronics industries that were in need of rescue after the pandemic.
  • Pave Way for Electric Vehicles (EVs): Imposing a green cess and exempting environment-friendly vehicles will favour EVs.

Identifiable Concerns

  • Timely inflow of funding.
  • Insufficient RVSFs.
  • Unsafe disposal of recyclable and non-recyclable materials.

Way forward and Suggestions

  • Safe disposal and material recovery should be the critical parameters of an effective policy.
  • It must leverage opportunities to maximise emissions gains from replacement of end-of-life vehicles and recover material from the wasted clunkers for reuse and recycling.
  • It should be strengthened further to include extended producer responsibility and making the rules legally binding.
  • Vehicle scrappage infrastructure should be scaled up country-wide for safe disposal of waste and for material recovery for recycling like steel, aluminum and plastics.

 

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