#TIL: Multi-dimensional benefits of scrappage policy
By Shilpi Samantray
The soon-to-be-released Vehicle Scrappage Policy by the Ministry of Road, Transport and Highways (MoRTH) aims to place a cap on the usage of the vehicle in terms of the years run. The main objective is to put old and polluting vehicles off the roads. The policy will have an incentive-based mechanism which will provide appealing benefits to vehicle owners to scrap and replace their old vehicles with new ones.
The old vehicles will undergo material recycling and the extracted raw materials will be used for manufacturing new vehicles. As per a study by HDFC, around 6% of annual steel demand can be met locally if old vehicles are recycled. This will help in significantly reducing the manufacturing cost of new vehicles. Manufacturers like Mahindra, Maruti and Toyota are already planning to set up authorised scrappage centres where people can recycle their old vehicles. They will be provided with a scrappage receipt which will help them in getting incentives while buying new vehicles.
Considering the existing number of vehicles on road, projections have been made that 9 million vehicles could go off the roads by 2021 and 28 million vehicles by 2025. This will lead to a reduction of major pollutants like CO2 emissions and particulate matters by 17% and 24% respectively. Studies show that if half of the BS II and BS III vehicles are scrapped, we can save on the oil import bill by reducing oil consumption by up to 2.7% i.e. approximately 8 million tons of oil in a year.
The COVID-19 pandemic has pushed us to reflect on the environmental damage inflicted by the hazards of pollution. This reflection presents an opportunity to spur the adoption of clean EVs towards a greener and sustainable mode of operation.
The adoption and implementation of a vehicle scrappage policy has a few easy wins such as :
- Reduce fuel consumption and air pollution as new vehicles will be more fuel-efficient
- Stimulate new demand for cleaner vehicles, thereby triggering sustainable economic growth
- Revive the automobile market which has been badly hit by the COVID-19 pandemic;
- Generate new employment opportunities;
- Reduce import bill by reducing import of oil and raw materials (like steel, copper, aluminium) used for manufacturing.
The scrappage policy will not only revive the auto market, trigger economic growth and generate new demand for vehicles — especially cleaner vehicles — but also increase India’s competitiveness in the international markets.
References:
https://v1.hdfcbank.com/assets/pdf/privatebanking/ThematicNote-AutoElectricVehicle-240118.pdf
https://www.pressreader.com/india/the-economic-times/20200222/281775631183328
https://isscnc.com/scrapped-vehicle-market-pegged-at-rs-43000-crore/
https://www.cia.gov/library/publications/the-world-factbook/rankorder/2246rank.html
