Narendra Modi sees investment worth Rs 10,000 crore from national scrappage policy

Prime Minister Narendra Modi, launching the national scrappage policy on Friday, said it will attract more than ₹10,000 crore in investment, creating thousands of new jobs. The green policy provides incentives for the replacement of aging vehicles with new, environment friendly ones.

“This policy will play a big role in the modernisation of the vehicle population in the country, removal of unfit vehicles from the roads in a scientific manner,” the prime minister said in an online address to an investor summit in Gujarat.

Under the policy, commercial vehicles will have to be scrapped after 15 years if they fail to get a fitness certificate. In the case of private vehicles, the time limit is 20 years.

The Prime Minister said the policy would create a viable circular economy of reuse, recycle and recover and will result in value for all stakeholders, while being environmentally responsible.

Gujarat is seeking investments for setting up vehicle scrapping infrastructure at the summit.

‘A Step in Waste-to-Wealth Drive’
PM Modi said the state has first-hand experience of the benefits of formal scrapping at the ship-breaking industry at Alang.

“There is both infrastructure and skilled manpower in the area. With this, it has the potential to become a hub for vehicle scrapping after ship recycling,” he said.

Road transport and highways minister Nitin Gadkari had announced details of the policy in parliament in March. Vehicle owners sending old vehicles to registered scrapping centres will be eligible for tax and price benefits. These incentives include a 5% discount from vehicle manufacturers, road tax rebate of up to 25% from states, registration fee waiver and scrap value of about 4-6% on the ex-showroom price of a new vehicle.

The Prime Minister said the policy would be a major step in the waste-to-wealth drive and demonstrates India’s commitment to the reduction of urban pollution and conservation of the environment.
PM Modi said those scrapping unfit vehicles will save on fuel as well as repair and maintenance costs. Accidents would decline as well, he said.

Small businesses dealing in scrap can act as collection agents for authorised scrapping centres, the PM said. Technology will allow the recovery of various materials from scrap.
India had to import scrap steel worth ₹23,000 crore last year. Scrapping in India is not productive with almost zero energy recovery and less than optimum recovery of high strength steel alloys or other metals, PM Modi said.

Automakers may sweeten the deal further with an additional discount on new vehicles, the government said. The policy will be first implemented for government-owned vehicles from April 2022, followed by heavy commercial vehicles the following year and for personal vehicles from June 2024, Giridhar Aramane, secretary, Ministry of Road Transport and Highways, said in an interview to All India Radio. Ministry data suggest that there are over 10 million vehicles without fitness certificates, Aramane said.
The automobile industry has long been seeking a scrappage policy to get older vehicles off the roads and generate demand for new ones. Commercial vehicles makers could especially benefit from the policy. Most the scrapping in India is currently done by small, unauthorised vendors in a process that is highly polluting and doesn’t recover materials to the maximum possible extent, Aramane said.