Assuming that the government somehow manages to achieve even half of its target of mobility electrification in the next decade, it still would put a huge amount of old cars out of action. Unless an effective old car scrappage policy is implemented, the objective of electrification won’t be fully realized.
The Ministry of Road Transport and Highways has come up with a draft policy to promote old car owners to scrap their vehicles in exchange for free registration for a new car. This sounds like an attractive proposition, considering that the RTO registration charges are soon going to be increased by up to 4,000%.
While it remains to be seen what would be the arrangement if the old car owner wants to upgrade to a vehicle of different category, this draft policy, if implemented, would go a long way in encouraging owners of polluting vehicles to dispose them in a proper manner.
Scrapping is going to be a huge business opportunity in India in the foreseeable future. As of now, Mahindra & Mahindra, in association with Metal Scrap Trade Corporation Ltd, has started India’s first authorized automobile scrapping center under CERO brand.
As per the policy, only authorized scrapping centers would be able to issue scrap certificates to the old car owners which can then be used as a proof to avail free registration on a new vehicle. Free registration of new vehicle is only valid in the same segment as the scrapped vehicle. This means that if you scrap a small car like Maruti Alto, you will get free registration on a similarly priced car.
Large scale adoption of old car scrapping through the authorized centers will help reduce vehicular pollution, reduce the population of unsafe cars on the road (new cars need to comply with latest crash test norms) and reduce the environment impact due to improper scrapping. It also would contribute to growth in new car sales.
The government is also planning to revise the policy pertaining to issue of fitness certificates of old vehicles. While the current fitness certificates have one year validity, the new ones would be valid only for six months. Also, only the buses that are friendly to differently-abled persons (wheelchair ramp, priority seats, signs, hand rails, stowage for crutches, etc) will receive fitness certificates.
Moving forward, there would be several authorized car scrapping centers spread across the country. Apart from offering free registration, both government and OEMs are expected to offer additional benefits such as tax concession, cash discounts, etc., on new cars for holders of scrap certificates.