Junk inefficiency: On vehicle scrappage policy

Scrappage policy can work if incentives are confined to fuel-efficient vehicle replacements

The much-awaited vehicle scrappage policy announced by the Transport Ministry, coming after the move for a green tax on ageing and polluting automobiles, promises economic benefits, a cleaner environment and thousands of jobs. Although it will take until April 1, 2022 for vehicles belonging to the government and the public sector to be scrapped, another year thereafter to identify junk heavy commercial vehicles through mandatory fitness checks, and finally other vehicles by 2024, it is a constructive road map. It will be no easy task, however, to put in place a credible system of automated fitness checking centres with help from States to assess whether commercial and private vehicles are roadworthy after 15 and 20 years, respectively, as the policy envisages. Equally important, enforcement will be key to get them scrapped once they are found unfit for use and to stop them from moving to smaller towns. States must also come on board to provide road tax and registration concessions, while the automobile industry is expected to sweeten the deal with genuine discounts on new vehicles. Transport Minister Nitin Gadkari, who has had limited success with enforcement of the amended Motor Vehicles Act of 2019 because States are not entirely on board, has the difficult task of ensuring that the scrappage plan gets their support, and the backing of manufacturers who stand to benefit from a spurt in demand. Heavy commercial vehicles, which contribute disproportionately to pollution — 1.7 million lack fitness certificates — pose the biggest challenge. Many of these cannot be replaced quickly in the absence of financial arrangements for small operators, who have opposed the new measures.

Vehicle scrappage and replacement is seen internationally as a route to rejuvenate COVID-19-affected economies by privileging green technologies, notably electric vehicles (EVs), and also as an initiative to achieve net zero emissions by mid-century under Paris Agreement commitments. India’s automobile ecosystem is complex, with dominant, legacy motors spanning fossil-fuel driven vehicles and a nascent EV segment. The industry’s share pre-COVID-19 was about 7.5% of GDP with significant downstream employment, but it also imposes a fuel import burden. The Centre has to arrive at a balance and have incentives that reward manufacturers of vehicles that are the most fuel-efficient. Failure to prioritise fuel efficiency and mandate even higher standards and enhance taxes on fuel guzzlers will only repeat the mistakes of vehicle exchange programmes abroad, where full environmental benefits could not be realised, and taxpayers ended up subsidising inefficiency. Ecological scrapping, as a concept, must lead to high rates of materials recovery, reduce air pollution, mining and pressure on the environment.



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