Scrappage policy will redefine automobile sector: PM Modi

With the launch today of the National Automobile Scrappage Policy, India moved to a waste-to-wealth phase in the automobile sector, with spin-off benefits for ancillary industries.

Prime Minister Narendra Modi, while virtually launching the policy at an Investor Summit in Gandhinagar on Friday, hinted that the policy would attract fresh investments worth ₹10,000 crore towards the development of scrapping infrastructure. It will redefine country’s mobility and automobile sector, he said.

“In the 21st Century, India needs to aim for clean, congestion free, and convenient mobility that will bring positive results in the lives of every citizen. The policy is an important link to achieve the circular economy of waste-to-wealth and energise India’s auto sector and metal sector with the principle of reuse, recycle and recover,” Modi said.

5% concession

The policy incentivises scrapping unfit vehicles with tax concessions and registration fee waivers, etc., for new purchases. Union Transport Minister Nitin Gadkari also hinted that car makers may be urged to offer 5 per cent concession to those producing a scrappage certificate of an old vehicle.

Auto industry veterans lauded the move, terming the scrappage policy a panacea that will also generate jobs in the auto ancillary/ scrappage space.

Girish Wagh, Tata Motors’ Executive Director & President – Commercial Vehicle Business, termed it a historic step for the company to participate in the vehicle scrapping space. “Appropriate scrapping of end-of-life vehicles will have sustained benefits for the ecosystem stakeholders and the environment alike. Tata Motors is setting up a Registered Vehicle Scrapping Facility (RVSF) in Ahmedabad to recycle up to 36,000 vehicles a year. An MoU for the same was signed on Friday with the Gujarat Government,” he said.

Renault India CEO & MD Venkatram Mamillapalle said: “This policy will provide the much-needed impetus in countering the old methods of scrapping, which were counterproductive. The (policy) framework augurs greater investments and will significantly prune the raw material cost and support refurbishment of sheet metal recycling.”

Sector analysts, however, maintained that the effective implementation of the policy would depend on the States that would need to workout financial incentives such as waiver of registration charges and road tax concessions, as promised in the policy.

Terming the policy a win-win for all stakeholders, Arindam Guha, Partner and Leader (Government and Public Services), Deloitte India, said, “States, which are early adapters, are likely to capture a higher share of investments and economic benefits.”

By government estimates, India has about one crore cars without valid fitness parameters, adding to the pollution and fuel costs.

Channelising used materials

The new policy would channelise the used materials — copper, aluminium, steel, rubber and plastic — back into production. “We aim for maximum recovery up to 99 per cent. This will increase availability of materials and reduce costs by up to 40 per cent for raw materials, thereby fuelling India’s competitiveness globally,” said Gadkari, adding that improved sales globally will fetch spill-over benefits for the Centre and States in terms of projected GST earnings of ₹40,000-50,000 crore and ₹30,000-40,000 crore, respectively.


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