Vehicle Scrapping Policy | Current Affairs & Hindu Analysis: Daily, Weekly & Monthly - UPSC PDF Download

Introduction

• Starting from April 1, the Ministry of Road Transport & Highways has announced through a notification that all vehicles owned by central and state governments, including buses owned by transport corporations and public sector undertakings, which are older than 15 years will be de-registered and scrapped. However, this rule will not apply to special purpose vehicles such as armoured and other specialised vehicles used for the defence of the country and for the maintenance of law and order and internal security. 
• The notification mandates that disposal of such vehicles should be ensured through the Registered Vehicle Scrapping Facility once 15 years have passed since the date of initial registration of the vehicle. The policy was announced in the Union Budget 2021-22 and requires fitness tests after 20 years for personal vehicles and after 15 years for commercial vehicles. States and Union Territories will offer up to a 25% tax rebate on road tax for vehicles that are purchased after scrapping old vehicles.

Vehicle Scrappage Policy

• To combat the issue of old and unfit vehicles, the government has introduced a policy which mandates fitness tests for such vehicles before they can be re-registered. This policy applies to government commercial vehicles that are more than 15 years old and private vehicles that are more than 20 years old, and they will be scrapped.
• In addition, higher re-registration fees will be imposed on vehicles that are 15 years or older from the initial date of registration, in order to discourage their use. To incentivize vehicle owners to scrap old and unfit vehicles, state governments are recommended to provide up to a 25% road tax rebate for personal vehicles and up to 15% for commercial vehicles.

Need for introduction of vehicle scrappage policy

• Enforcement will play a crucial role in getting the unfit vehicles off the road and preventing them from being used in smaller towns. In addition, states need to cooperate by offering road tax and registration discounts, and the automobile industry is expected to incentivize the deal with actual discounts on new vehicles.
• The Transport Minister has the difficult task of ensuring that the scrappage plan receives support from the states and manufacturers, who will benefit from the increased demand. The main challenge lies with heavy commercial vehicles, which contribute significantly to pollution, as 1.7 million of them lack fitness certificates. 
• The replacement of these vehicles is not easy, especially for small operators who have opposed the new regulations due to the lack of financial arrangements.

Significance

• The vehicle scrapping policy aims to phase out unfit and polluting vehicles in an environmentally friendly and safe way.
• It promotes a circular economy and sustainability while creating job opportunities and bringing in investments of around Rs 10,000 crore.

Issues

• Trucks face limited incentives and poor cost economics, while other segments lack addressable volumes. Scrapping entry-level small cars over 15 years old may be unattractive, with potential benefits of only ₹70,000 compared to resale value of around ₹95,000. 
• Lack of standard operating procedures for setting up scrapping centers may lead to accumulation of old vehicles, similar to solid wastes. Scrapping can release toxic metals, such as mercury, lead, cadmium, or hexavalent chromium, which if not properly regulated, can pollute the environment and have long-lasting consequences.

Way Forward

• The scrappage policy has the potential to achieve the government's goal of 30-40% electrification of the vehicle fleet by 2030. A comprehensive plan is needed for removing ELV from the road, and freight transporters need stronger financial support. It is essential to take old fleet vehicles off the road to leverage the benefits of implementing BSVI vehicles fully. 
• Adequate support should be provided to Electric Vehicles, such as creating necessary charging infrastructure and manufacturing battery packs. The scrappage scheme should incentivize the replacement of old vehicles with EVs, and the government should frame policies to reduce the purchasing of traditional petroleum-powered vehicles. A special linkage of policies, like the Delhi government's EV policy, is necessary at the national level to promote electric vehicles.

Conclusion

• Ecological scrapping should result in high rates of materials recovery, reduced air pollution, and pressure on the environment. Vehicle scrappage and replacement can rejuvenate COVID-19 affected economies by promoting green technologies, particularly EVs. 
• It can also 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 fossil-fuel-driven vehicles and a nascent EV segment.