Introduction
The transport sector is estimated to emit 12 per cent of the CO2 emissions in India, making it one of the top contributors to pollution in the country. Vehicle Scrapping Policies (VSP) have been introduced as incentive programs that encourage the replacement of old vehicles with newer, more efficient vehicles. On the face of it, vehicle scrapping policies appear to be directed towards reducing pollution; however,during the 2008 recession, many European countries implemented large-scale vehicle scrapping programs to stimulate the automobile industry and increase market demand. Studies on these policies have suggested that such policies, in general, interfere with the market and are not desirable.
India’s Motor Vehicles Registration and Functions of Vehicle Scrapping Facility Rules was introduced in the year 2021, along with the Voluntary Vehicle Scrappage Policy. The policy requires passenger vehicles older than 20 years and commercial vehicles older than 15 years to pass a “fitness and emission test” to keep their registration. More recently, in 2024, the Ministry of Road Transport and Highways notified the draft rules of the Motor Vehicles (Registration and Functions of Vehicle Scrapping Facility). To accelerate scrapping, the government has introduced incentives, which include discounts on the purchase of new vehicles against a certificate of scrapping. The objective of the scheme is to reduce pollution levels that are caused by the use of end-of-vehicles (ELVs) due to increased fuel inefficiency, and also promote a circular economy by recycling materials. It was also aimed at giving a boost to the automotive manufacturing sector after the slowdown caused by the pandemic.
In 2021, the Ministry of Environment, Forest and Climate Change (MoEF&CC) indicated that there were about 21.4 million vehicles that were older than 20 years in India; however, simple age-based identification was not considered an appropriate method for testing where a vehicle should be scrapped or not. In 2022, the automated testing was initially used to inspect commercial vehicles, and eventually in June 2024, the passenger vehicles were also included for the rigorous testing.
Apart from a centralized policy, different states have implemented their own scrappage policies. For instance, in Delhi, the scrapping of 10-year old diesel vehicles and 15-year old petrol vehicles has been mandated for a rebate of 25% on road tax, on purchase of new vehicles with the certificate.
To scrap a car in accordance with the policy, the car owner must notify the RTO office with an affidavit, stating that the car does not have any claims of theft, loans or insurance. The owner must, then, find a scrap dealer. For instance, in Delhi, the list of firms that are authorized to carry out scrapping are notified by the Delhi Transport Department. The choice to voluntarily not scrap an old vehicle is with the car owner; however, provisions of renewal charges, fees, and taxes will increase the maintenance of the old vehicle.
There are six authorized firms who will check the original documents of the owner before scrapping the vehicle and issue a ‘Certificate of Vehicle Scrapping’ and a confirmation letter. These documents will then be submitted to the RTO office and the certificate can be used for the tax rebate on purchase of new vehicles. However, some concerns have been shared by the States on the change in the motor vehicle tax that the central government has decided to cut down with the new policy.
Resource Efficiency and Extended Responsibility
Beyond the primary aim of limiting emissions, the policy has great potential to promote resource efficiency in the country, by recycling scrap and reducing the import dependency of the country. In 2022, the country’s aluminum scrap import had gone up by 6 per cent to 1.75 million metric tons. The recycling of these materials can also provide an opportunity for the automotive manufacturers to obtain low-cost materials like steel, aluminum, rubber, plastic, and copper from the ELV. In total, with proper implementation of the policy, the possibility of a circular economy can bring down vehicle manufacturing and purchase prices.
The VSP runs in synergy with the policy approaches, such as the Extended Producer Responsibility that holds the manufacturers responsible for the entire lifecycle of their products. The EPR also holds the producers accountable for the collection, recycling, and disposal of the products at the end of the life cycle. Since both the policies focus on encouraging recycling, the Vehicle Scrapping Policy can integrate the EPR frameworks to further promote the uptake in voluntary scrapping. The draft management End-of-Life Vehicles (Management) Rules, 2024, included the EPS system for automakers and other parties, and will be implemented from April 2025. Tata Motors has commissioned its first RVSF in Jaipur, Rajasthan, and is in the process of launching 11 more facilities across the country.
Another key component of the policy is the integration of the information scrapping sector into the formal ecosystem, which is intentionally put in place to ensure that the scrapping process is done in a responsible and environmentally safe way. Till now, 62 Registered Vehicle Scrapping Facilities (RVSFs) have been established across the country, which includes 22 of the former informal scrappers.
Way Forward
The Vehicle Scrapping Policy is designed to phase out old and polluting vehicles and present a significant opportunity to improve environmental sustainability. However, there are still some roadblocks, such as a fragmented approach in the implementation of the policies across states due to varying rules and incentives.
On the other hand, while the policy has attracted investment with new RVSF being built, the rate of vehicles being brought in for scrapping have been significantly less. The lack of awareness about the policy and the process has been one of the major reasons for the limited business.
Addressing these hurdles requires a coordinated effort from multiple stakeholders, including government bodies, automotive industry, and the public. The effort to raise awareness about the process and making information available can ensure that the enhanced infrastructure is met with an uptake of the process. Furthermore, incentives that are provided to encourage vehicle owners to scrap old vehicles are often seen as inadequate. The financial benefits may not be compelling enough to motivate large-scale participation especially for the middle-income groups who do not frequently switch their vehicles.
Ultimately, the VSP is a multi pronged policy which can play a pivotal role in driving the transition towards a circular economy, where resources are efficiently utilized and environmental impacts are minimized.
