Mumbai: Experts have hailed the draft guidelines for setting up authorised vehicle scrappage facilities released by the road transport and highways ministry last week as a step in the right direction but said that in order to make it a success, the government needs to force or incentivise owners to scrap their old vehicle.
The guidelines outline the infrastructure requirements and the procedure for setting up vehicle scrappage facilities in the country, thus streamlining the process for entities interested in entering this business.
However, the guidelines fall short of imposing a limit on the usage of vehicles after which they need to be scrapped. Nor do they list incentives for vehicles owners to voluntarily scrap their automobiles.
“The most critical thing is that we need to define ELVs (end-of-life vehicles) in terms of kilometres run, or vehicle age, or a combination of both, as has been done in other countries,” said Sumit Issar, director at Cero, the country’s first authorised vehicle recycler.
“If scrapping old vehicles is voluntary, will the policy have an impact in the near term? I’m not sure it will.”
The automobile industry in India, especially commercial vehicle makers, have been lobbying for a scrappage policy that puts a cap on the age of vehicles beyond which they must be scrapped. This would create demand for newer vehicles in the market, thus aiding the industry which has been grappling with one of steepest demand downturns for the past one year.
The transport ministry’s draft guidelines define ELVs as vehicles which are no longer validly registered or have their registration cancelled or vehicles which are damaged beyond repair. However, there is no mention of an age limit.
“As there is no mention of a forceful mandate in end of life criteria like the industry was expecting, the chances of it generating replacement demand in 2020-21 are grim,” said an executive at a vehicle manufacturer, requesting not to be identified. “Also, it is evident from the requirements that setting up of the scrappage facility will surely take more than a year, even for a large corporate. Thus the implementation of the scrappage policy will take a good amount of time.”
Tata Motors and Ashok Leyland declined to comment.
Scrappage is the process in which ELVs are disposed of, typically using shredders that tear them down into tiny pieces of metal which can then be recycled.