Five impacts of scrappage policy on India’s EV market

Union Road Transport and Highway Minister Nitin Gadkari announced the Vehicle Scrappage policy in Lok Sabha, it is a government-funded program to replace the aged vehicle with Eco-friendly vehicles. The main objective of the policy is to reduce pollution, oil import, with smart and advanced features green mobility (EV)  is boosted.

According to the Ministry of Transport, India has 17 lakh medium and heavy commercial vehicles that are more than 15 years old without any valid fitness certificate, 51 lakh light motor vehicles older than 20 years, and 34 lakh light motor vehicles older than 15 years.

Ministry of Transport, India has 17 lakh medium and heavy commercial vehicles that are more than 15 years old without any valid fitness certificate, 51 lakh light motor vehicles older than 20 years, and 34 lakh light motor vehicles older than 15 years.

In a current scenario, there is around 17 lakh medium and heavy commercial vehicle are older than 15 years and 51 lakh light motor vehicle which are older than 20years have to be scrapped. This policy is “win-win” thing for all of us like it reduce the pollution and improve safety by replaced with Electric Vehicle, boost the availability of low-cost raw material like plastic, steel, aluminum, rubber, electronics, etc.

Vehicle scrappage policy is the substitute to replace the older vehicle technology, the automated fitness center will be issued the Fitness certificate for a vehicle based on this certificate owner will get discount on behalf of scrap value equivalent to 4-6% ex-showroom price.

The criteria for scrapping the old vehicle are based on the fitness of the vehicle through Automated Fitness Centers. Currently, there are 7 automated fitness centers and two authorized scrappage centers. The union road and transport ministry setting up of AFC on public and private mode so more actively and the quickly old vehicle will be scrapped. It will lead to the creation of more scrap yards in India and the effective recovery of waste from old vehicles.

The registration vehicle scrapping facility shall be provided connectivity and access to the VAHAN database of the vehicle and shall be authorized one who can make entries of the vehicle regarding scrapping.

The Following Vehicles will be Offered for Scrapping:-
A vehicle that has not renewed its certificate of registration by rule 52 of the CMVR.
Vehicles that have not been granted a certificate of fitness per Section 62 of the Motor Vehicles Act, 1988.
The Vehicles that have been damaged due to fire, riot, natural disaster, accident, or any calamity, following which the registered owner self certifies the same as scrap.
Vehicles that have been declared obsolete or surplus or beyond economic repair by the Central/State Organizations of the government and have been offered for scrapping.

Scrappage Vehicle Policy is expected that step towards to environment-friendly vehicle will move, encourage the green mobility, reduce the dependence on the importing oil from other country and reducing pollution. With this policy, the Government of India added a “Green Tax” that people have to pay for renewing private vehicle registration after 15 years.

Indian is quite smart as all we know, rather than paying the green tax they will buy new Electric vehicle because scrapping the vehicle gives incentives to buy new Electric vehicle. India’s automobile industry turnover will reach RS 10 lakh crore from the current RS 4.5 lakh crore and it will create new 35000 jobs in the industry.

As per the policy guidelines, the vehicle has to undergo an automated fitness center as per international standards, and the cost of this test for a car is around Rs 40,000. Investing this amount in a used vehicle is not a good decision considering all. Perspective, instead why not drive electric vehicle with new features and to support the environment, this policy is changing the mindset of the public and Indians always prefer other options so as result this policy will boost in sales of electric vehicles. Electric Vehicles have numerous advantages over ICE engines/Fuel Vehicles.

The certificate from the fitness center is valid for only 5 years after that owner is required to get another certificate, costing is the same. After every 5 years, no one would like to invest such an amount of money, buying a new Electric Vehicle with incentives and no maintenance would be the best choice.

If a vehicle gets failed then according to law, driving the unfit vehicle on road is illegal, so for legal compliance also people’s choice would be buying a new Electric Vehicle, hence the demand for EVs is increasing in a very good manner. India is the largest market of 2 wheelers because of this policy 2 wheeler EV sales are reaching a new milestone.

This policy will come on 1st April 2022, some monetary incentive will offer to the owners who sent their vehicle for scrap, and if a vehicle gets failed thrice then very few choices the will owner have. Indian are attracted to Electric Vehicle already actual before Government of India changes any rule or implement new compliance people are buying new Electric Vehicles.