#In-Depth: Vehicle Scrappage- Key to India’s Clean Mobility Ambitions

To contain vehicular pollution, the government plans to ensure; 1) newer vehicles on the road are cleaner (India recently leapfrogged from BS IV to BS VI emission standards), 2) older vehicles, especially heavy commercial vehicles, are taken off the road by scrapping.

What is Vehicle Scrappage Policy?

Additionally, studies show that if half of the BS II and BS III vehicles are scrapped, India can save on the oil import bill by reducing oil consumption by up to 2.7% i.e. approximately 8 million tons of oil in a year.

Source: FICCI Report

“Vehicle scrappage if implemented has the potential for 28 million vehicles to go off the road by 2025, mostly comprising two-wheelers. This will reduce carbon dioxide emission by 17% and cut particulate matter in the air by 24%”- HDFC Bank Study

While this shift from a linear economy to a circular economy is a challenge, it also has a tremendous economic opportunity. By moving the vehicle back to its maker, manufacturers employ a cradle-to-cradle strategy, a cornerstone of the circular economy. Manufacturers could then harvest usable parts or retrofit the vehicle, saving much in money and energy required for moving and recycling. This would create capacity and efficiency in the primary market itself. An initiative in this direction is seen in the subscription-based vehicle possession already launched in India by Mahindra & Mahindra and Hyundai.

But what’s the roadblock?

In India too, for example, the Government of National Capital Territory of Delhi’s EV policy provides a purchase incentive when a customer scraps an old ICE vehicle and buys a new EV. For procurement of electric commercial vehicles, the Delhi government has also announced an interest waiver on loans to buy EVs along with the waiver of registration fee (road tax) on any EV being registered in the city for the period of next three years. This is a unique approach towards removing old-polluting vehicles along with making the purchase of cleaner vehicles such as EVs more affordable and reliable.

E.g.,. Russia provides subsidised loans for the purchase of domestically-produced cars, while South Korea stimulates the domestic demand for cars with considerable tax incentives. Countries such as Egypt which implemented scrapping programs such as Vehicle Scrapping and Recycling Program of Activities (PoA) limited to taxi vehicles saw equivalent to over 130,000 tons of carbon dioxide avoided between 2013 and 2014. In the US and Germany, scrappage programs have been successful in putting old, polluting vehicles off the road.

Moving Ahead

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