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Vehicle-scrappage policy and circular economy


Recently, the Prime Minister launched the National Vehicle Scrappage Policy on August 13, 2021.


GS-III: Environment and Ecology (Environmental Pollution and Degradation, Conservation of the Environment, Government Policies and Interventions), GS-III: Indian Economy (Macroeconomics)

Dimensions of the Article:

  1. About the National Vehicle Scrappage Policy
  2. Benefits of the National Vehicle Scrappage Policy policy
  3. What is Circular economy?

About the National Vehicle Scrappage Policy

  • The National Vehicle Scrappage Policy is also dubbed as “voluntary vehicle-fleet modernisation programme” and aims to modernise India’s “vehicular population”.
  • It also seeks to remove unfit vehicles from roads in an environment-friendly and scientific manner.
  • It is in line with India’s goal for 21st century to achieve a clean, congestion-free and convenient mobility.
  • It seeks to create a viable circular economy and bring value for all stakeholders.
  • Under the policy, vehicles will be scientifically tested through authorised and automated centres before it is finally scrapped.
  • As a disincentive, increased re-registration fees would be applicable for vehicles 15 years or older from the initial date registration.
  • Which vehicles are to be scrapped?
  • Commercial vehicles with age of 15 years and personal vehicles with age of 20 years old have been marked for scrapping irrespective of whether they run on diesel or petrol. These vehicles would be scrapped if they fail an automated fitness test following which these will be deregistered.

Benefits of the National Vehicle Scrappage Policy policy

  • Policy has several economic and environmental benefits. It will play a big role in modernising and phasing out the old polluting vehicles in an environment friendly manner.
  • This policy of modernity in mobility will reduce the burden of travel and transportation.
  • It will also promote self-reliance of India in the auto sector and metal sector.
  • According to the Union Road Transport and Highways Minister, currently, India has 10 million cars without valid fitness parameters that adds to pollution and fuel costs. Thus, replacement of old vehicles will positively benefit environment.
  • It will generate about 50000 generate direct and indirect employment.
  • It will lead to creation of more scrap yards in the country and effective recovery of waste from old vehicles.
  • In the new fitness centers, 35 thousand people will get employment and an investment of Rs 10,000 crores will be pumped in.
  • This will boost sales of heavy and medium commercial vehicles that had been in the contraction zone as a result of economic slowdown triggered by the bankruptcy of IL&FS (Infrastructure Leasing & Financial Services) and Covid-19 pandemic.
  • The government treasury is expected to get around Rs 30,000 to 40,000 crores of money through Goods and Services Tax (GST) from this policy.

Prices of auto components would fall substantially with the recycling of metal and plastic parts.

Benefits to those who are recycling

  • Old vehicles will be tested at authorized Automated Fitness Center and will not be scrapped merely on the basis of age. The state governments may be advised to offer a road-tax rebate of up to 25% for personal vehicles and up to 15% for commercial vehicles to provide incentive to owners of old vehicles to scrap old and unfit vehicles.
  • Vehicle manufacturers will also give a discount of 5% to people who will produce the ‘Scrapping Certificate’ and registration fees will be waived off on the purchase of a new vehicle.

What is Circular economy?

  • A circular economy is an economic system that tackles global challenges like climate change, biodiversity loss, waste, and pollution.
  • Most linear economy businesses take a natural resource and turn it into a product which is ultimately destined to become waste because of the way it has been designed and made. This process is often summarised by “take, make, waste”.
  • By contrast, a circular economy employs reuse, sharing, repair, refurbishment, remanufacturing and recycling to create a closed-loop system, minimising the use of resource inputs and the creation of waste, pollution and carbon emissions.

-Source: The Hindu

December 2023