After weeks of inter-ministerial deliberations, the Ministry of Road Transport and Highways (MoRTH) announced the motor vehicle scrapping policy this week. In an almost similar statement given in the Parliament and to media persons, Mr. Nitin Gadkari, Union minister for MoRTH, laid out the broad outlines of the proposed policy. The scrapping policy was one of the key announcements of the Union budget of 2021. Mr. Gadkari proclaimed the policy as a win-win. Once implemented, the scrapping policy is expected to reduce vehicular tailpipe emissions, import bill of crude oil and avoidable accidents from unfit vehicles.
Owning a personal vehicle is still an aspiration from many Indians. A household’s decision to purchase a vehicle is influenced by current and prospective disposable income, credit conditions, car prices and new car styles. Therefore, if we are looking from the supply side, more trade-in means more scrapping.
Most commercial passenger and goods vehicles in India do not possess requisite fitness certificate. A vehicle eventually heads to unorganised scrapping, without proper incentive for the registered owner, when registration is allowed to permanently lapse. Similarly, its curtains when new or used car dealer, who has received the car as trade-in, decides he cannot profitably repair, recondition and resell it as an operable vehicle.
As per Mr. Gadkari’s statement in the parliament, India has 5.1 million (51 Lakh) vehicles which are over 20 years old and 3.4 million (34 Lakh) vehicles which are over 15 years old. As per the minister, 1.7 million (17 Lakh) light and heavy commercial vehicles do not have fitness certificates. A fitness certificate covers aspects like braking, tyre grip, and mechanical functions. This laxity leads to accidents and loss of precious human life.
India imports crude oil worth $102 billion (approx. 7,50,000 crores) annually and older vehicles consume 10-12% more fuel as compared to new models. Post 31st March 2020, only the vehicles (both two-wheeler and four-wheeler) compliant with BS6 emission norm can be sold or registered, as announced by the Indian government. Soon after this mandate, a number of bike and car manufacturers launched BS6 variants of their most demanded car/bike models. However, most of the vehicles are still BS4 compliant.
The level of sulphur and nitrogen oxide content in fuel plays a significant role. BS6 fuel has lower sulphur content than BS4 fuel. The sulphur content in BS6 fuel is five times lower (10ppm) as compared to sulphur content in BS4 fuel (50ppm). And, the nitrogen oxide level for the BS6 diesel engine and petrol engine is brought down by 70% and 25%. The BS6 norms vehicles are required to emit nearly 60mg/km of NOx (nitrogen oxides) emission, not more than that. Whereas, it was 80mg/km in the case of BS4 norms. Though, the particular matter (PM) limit has also been capped at 4.5mg/km in petrol engines.
Diesel Particulate Filter (DPF) and Selective Catalytic Reduction (SCR) came up with a role in BS6 norm, whereas, it wasn’t available with BS4. With the introduction of BS6 emission norms, Real Driving Emission (RDE) is also implemented to measure a vehicle’s pollutant emission in real-time conditions. Onboard Diagnostic (OD) feature is another change that came up with BS6. It wasn’t introduced with BS4. From an environmental point of view, the scrapping of vehicles which comply with the older BS4 norms is compelling and commonsensical.
Scrapping can bring down cost of vehicle components by as much as 40% and aid in recovery of automobile component sector. Incidentally, the automobile component sector is the biggest employer in the country, creating 37 million (3.7 crores) direct and indirect jobs. The new scrapping policy is expected to create 35,000 jobs at scrapping centres.
To incentivise scrapping, the Union government has issued a directive to automobile manufacturers, to provide a five per cent discount to the holder of scrapping certificate on the ex-showroom price of new vehicle. Government has proposed to waive off the registration fee for vehicles purchased upon scrapping of old vehicles.
Newer vehicles are lighter and they either no or negligible maintenance costs; it brings down the overall cost of running and ownership. India imports a considerable amount of aluminum and copper; scrapping has the potential to reduce input costs for automobile manufacturers and other industries as well. The Union government has decided to keep the draft scrapping rules in public domain for 30 days since its date of publication on 15th March, 2021. Feedback and suggestions have been sought from all stakeholders, upon which the final rules will be drafted.
One of the radical changes proposed by Mr. Gadkari during his statement in the parliament was GPS-based toll collection system. Under this methodology, toll on national highways (NH) will be deducted as and when a vehicle passes a designated check-point on the NH. Removal of toll gates will eradicate wastage time during slowing down and stoppages at toll gates.