PM launches scrap policy for unfit vehicles; projects gain for owners, economy

Relevance: On Vehicle scrappage policy

Synopsis: A formal launch of National Vehicle Scrappage policy is an important step towards waste to wealth. A critical analysis of the policy.

Context

India’s National Vehicle Scrappage Policy, unveiled in March 2021, has been formally launched by the Indian Prime Minister. It will help phase out unfit and polluting vehicles and also promote a circular economy. This waste-to-wealth campaign has been linked with swachhata (cleanliness) and aatmnirbharta (self-reliance).

• National Vehicle Scrappage policy is also known as Voluntary Vehicle-Fleet Modernization Programme.

Note: Please go through the above article first. Only new points have been included in the present article.

How the policy aids circular economy?

When a car is scrapped, apart from metals including iron and steel, many other parts may emerge that can be refurbished and ploughed back into use. Recycled steel from scrap, even seats and plastic parts, have value in the scrap economy. It is similar to the economic activity of scrappage of old ships, like in Alang shipbreaking yard in Gujarat.

In a circular economy, products, materials, equipment and infrastructure are kept in use for longer, thus improving productivity.

Benefits

• Investment and jobs: The new vehicle scrapping policy will attract Rs 10,000 crore worth of new investments in the country and create 35,000 new jobs
• The new policy would provide a boost to the country’s automobile and metal industries.
• Rare earth metals: When scrapping is done scientifically, it will be possible to recover rare earth metals that drive modern technology.
• Aid in economic recovery: Globally, a scrappage policy has been followed by boost in demand in the auto manufacturing sector, especially in Europe and the US. This has also been a tool to deal with economic slowdown in the manufacturing sector and consumption due to recession.

Issues

One of the issues is that the entire onus of incentivizing vehicle renewal depends on the discretion of the state governments, like rebates in road tax etc. Given the fact these are important sources of state revenue, the extent to which the state governments will implement this is not yet known.

Suggestions/Measures

1. Stimulus by central govt: The central government can allow Goods and Services Tax cuts for replacement vehicles and even consider direct incentives for targeted fleet renewal of most polluting old trucks and buses.
2. A rebate can be given to the owners of end-of-life vehicles who are interested in ‘only scrapping’ the vehicle without immediate replacement. Higher incentives can be given for ‘scrappage and replacement’ of old / end-of-life vehicles.
3. Incentive support for the personal vehicle segment on the other hand can be linked with voluntary electrification. A study carried out by the International Council on Clean Transportation has shown that in Germany, replacing old cars with new cars powered with internal combustion engine does not provide as much effective emissions gains as replacing with electric vehicles. Therefore, limiting the numbers of personal vehicles that can qualify for incentives and linking their voluntary replacement with electric vehicles can contribute towards accelerating the target of 30-40 per cent electrification by 2030.
4. Increase limits on recoverable material: Under Automotive Industrial Standards – 129 (AIS 129) on reuse, recycling and material recovery from vehicles, 80-85% of material used in vehicle manufacturing by mass is to be recoverable / recyclable / reusable at the end of life. It should be extended to 85-95% to maximise material recovery as well as energy recovery from residual waste like used oil, non-recyclable rubber, etc.
5. Align with the European regulation to include extended producer responsibility to make vehicle manufacturers responsible for their own waste.
   • Extended Producer Responsibility (EPR) is an environmental policy approach in which a producer’s responsibility for a product is extended to the post-consumer stage of a product’s life cycle.

Terms to know:

• Waste to Wealth mission
• Circular Economy