News Room - Steel Industry

Posted on 19 Mar 2021

India's scrap availability to get a boost as govt introduces new vehicle scrapping policy

Union Minister Nitin Gadkari announced a voluntary vehicle scrappage policy in the Lok Sabha today while highlighting the fact that the measure is in harmony with new technology that promises to usher in a win-win situation for all.

The new policy is expected to boost the manufacturing and services sectors with the aim of generating employment.

Policy objective
The central objective of the policy is to reduce the presence of old and polluting vehicles on the roads and to achieve 25-30% reduction in vehicular air pollutants in order to fulfill India's climate commitments, improve road and vehicular safety, achieve better fuel efficiency and formalise the vehicle scrapping sphere. Furthermore, the policy aims to boost availability of low-cost raw materials for the automotive and electronics industries.

Vehicle scrapping criteria
The criteria for a vehicle to be scrapped are primarily based on the fitness of vehicles tested at Automated Fitness Centres in case of commercial vehicles and non-renewal of registration for private vehicles. The criterion has been adapted as per the international best practices and standards followed in countries such as Germany, the UK, USA and Japan.

The fitness test and non-renewal of registration are for vehicles that fail to get a fitness certificate. These include...

• Commercial Vehicles after 15 years
   
• Private Vehicles after 20 years
   
• Government Vehicles after 15 years
   

A vehicle failing the fitness test or failing to get a registration renewal may be declared as an 'End of Life Vehicle'.

Proposed incentives
Incentives to owners of old vehicles for scrapping old and unfit vehicles through registered scrapping centers include:

• Road tax rebate (advisory has been issued to all states)
  i.e. up to 25% rebate in road tax for personal vehicle
  and 15% for commercial vehicle
   
• 5% rebate on the purchase of new vehicles against a scrapping certificate
   
• Waiver of registration fees for a purchased vehicle
   

The Ministry of Road Transport and Highways will promote the setting up of Registered Vehicle Scrapping Facility (RVSF) across the country. Some of the identified places include Alang in Gujarat, where developing a highly specialized center for scrapping is in the works. Similarly, the government shall promote setting up of Automated Fitness Centres on a PPP model by the state governments, private sector, and automobile companies, etc.

Timeline

The government in the next few weeks is expected to publish draft notifications, which shall be in the public domain for a period of 30 days to solicit comments and views of stakeholders.

Apart from attracting additional investments of around INR 10,000 crore and 35,000 crore job opportunities, the policy is expected to give a big boost to India's domestic ferrous scrap availability and, in turn, help in achieving India's steel capacity target of 300 mn t.
India's ferrous scrap demand is expected to increase significantly in the coming years from present levels of around 30-32 mn t per year.

Source:SteelMint