The Scrappage Policy: Driving India Towards a Safer and more Sustainable Future

Satyakam Arya is an accomplished executive with over 28 years of international experience in the automotive industry. He has held leadership roles at Daimler, Mahindra, and Maruti Suzuki, excelling in supply chain management, greenfield project setups, and business turnarounds. Grounded in passion, discipline, and integrity, he has earned accolades for driving innovation and operational excellence. Satyakam has spearheaded initiatives in sustainability, skilling, and economic growth. Under his leadership, DICV’s BharatBenz brand and export operations have achieved global success.

India is the world’s fifth-largest economy with a GDP of $3.89 trillion. According to S&P, we’re on track to become number three by 2030. The automotive industry is one of India’s largest sectors and the growth of the CV segment has been instrumental in achieving this.

According to a 2022 analysis by NITI Aayog and RMI, India currently transports around 4.6 billion tonnes of freight annually. This demand is driven by factors like urbanization, population growth, the expansion of e-commerce, and rising income levels. As these trends continue, road freight movement is expected to rise to 9.6 trillion tonnes by 2050.

Currently, around 70% of road freight is transported by India’s 4 million trucks, mostly medium and heavy-duty vehicles. As the amount of road freight continues to grow, the number of trucks is expected to more than quadruple to approximately 17 million by 2050.

But what does this economic growth mean for the environment? Even today, trucks are already responsible for about half of the well-to-wheel CO2 emissions from on-road transport. Most of the trucks on the road are older vehicles that do not conform to the latest emission standard, Bharat Stage VI (“BSVI”, equivalent to EURO6).

The government has therefore introduced a Vehicle Scrapping Policy which aims to phase out unfit commercial vehicles over 15 years old. Under this policy, vehicles must pass fitness and emission tests; if they fail, they are classified as End-of-Life Vehicles (ELVs) and must be scrapped. The aim is to reduce pollution, improve road safety, and stimulate the automobile industry by encouraging the purchase of newer, cleaner vehicles.

According to a report by ICRA, more than 1.1 million medium and heavy-duty commercial vehicles have already surpassed the 15-year mark, with an additional 570,000 expected to do so by FY2026. Given this, it is imperative that these outdated vehicles are replaced with safer, cleaner alternatives. In short, the vehicle scrapping policy is nothing short of a lifeline for the sector and society.

Safety at the Core

India’s roads have long been burdened with older trucks and buses that are not only inefficient but also dangerous. The Ministry of Road Transport and Highways has repeatedly highlighted the risks posed by older vehicles. According to their reports, commercial vehicles over 15 years old are significantly more prone to being involved in road accidents. Mechanical failures, particularly in brake systems and steering mechanisms, often lead to severe consequences. This is a critical issue we need to address as we move toward modernizing the sector.

This is where the Vehicle Scrappage Policy steps in - it directly addresses this issue by steadily phasing out these unsafe vehicles. But this policy is not just about replacing old metal; it is about saving lives and transforming the nation’s environmental footprint. In many ways, it marks the beginning of a new era - one where safety, sustainability, and economic growth go hand-in-hand. It is a transformative step forward and its impact will be felt for years to come.

Reducing Carbon Footprint

When it comes to pollution, the difference between old and new vehicles is staggering. A BSIII-compliant vehicle emits nearly 40 times more particulate matter than a BSVI vehicle. Just imagine the strain that puts on India’s already polluted cities! The Scrappage Policy is pivotal in tackling vehicular emissions because it pushes for the removal of older, more polluting vehicles from our roads. This is the need of the hour, especially in urban areas like Delhi NCR and Mumbai, where air quality is already a critical issue.

Raising the Efficiency Bar

Replacing an aging vehicle with a modern one brings both environmental benefits and operational efficiencies. Take BharatBenz trucks, for instance - they offer up to 20% better fuel efficiency compared to older models. Over the lifecycle of a vehicle, this translates into significant cost savings for fleet operators. Additionally, modern trucks require fewer maintenance interventions, which leads to reduced downtime and increased fleet utilization. All of this ultimately boosts profitability for businesses.

Aiding Circular Economy

The concept of a circular economy is all about reducing waste and maximizing the reuse and recycling of resources to create a sustainable, regenerative economic model. In India, embracing this approach within the automobile industry can significantly reduce our reliance on raw material imports by recycling the country’s vast fleet of old vehicles. A large variety of materials can be recycled from scrapped vehicles including steel, aluminum, plastic, glass, and rubber. Some estimates suggest recycling scrapped materials can bring down raw materials costs by up to 5%.

With raw material costs rising globally, the scrappage policy plays a crucial role in helping us recover valuable materials from end-of-life vehicles. It is an approach that encourages a more efficient and streamlined recycling process, ultimately leading to cost savings on raw materials and opening up new economic opportunities for the country.

Incentives through Scrapping Certificates

The Delhi government has launched a tax rebate incentive scheme to encourage commercial vehicle owners to scrap their old trucks. Under the scheme, owners can receive a registration fee discount when their old transport vehicles, including those used for passenger and goods transport, are scrapped at a government-authorized Registered Vehicle Scrapping Facility (RVSF). Owners of diesel commercial vehicles are eligible for a 15% discount on registration fees, upon submitting a Certificate of Deposit (COD) from the RVSF.

A Greener Tomorrow

At DICV, we see the scrappage policy as a truly transformative catalyst for the industry. It is not just a policy for us - it perfectly aligns with our commitment to fleet modernization and driving progress. Our dedication to innovation is reflected in the continuous evolution of our products. BharatBenz trucks and buses, equipped with cutting-edge safety and emissions technology, are not just built to meet today’s demands – they are engineered to exceed tomorrow’s expectations. We are not merely keeping pace with change; we are leading it, ensuring our solutions will shape the future of mobility in India and beyond.

Of course, there are challenges. The scrappage policy faces hurdles, such as the limited number of scrapping facilities. Nationwide, there are only 65 operational vehicle scrapping centers, while another 57 have been approved. An equally pressing concern is the lack of sufficient Automated Testing Centers (ATCs), as they are important in determining vehicle fitness. Only 81 ATCs are operational and 24 of those are concentrated in Gujarat; most states do not have a single operable ATC. Even though there are 184 ATCs under construction, it will take months for them to become operational. A significant increase in the number of operational ATCs and vehicle scrapping centers is vital to make the policy a success.

However, I firmly believe that the long-term benefits far outweigh these initial challenges. The expansion of this infrastructure is absolutely essential. It is crucial that industry players work hand-in-hand with policymakers to ensure that the required facilities are established in a timely manner, while also raising awareness among fleet operators.

The Scrappage Policy is not just a policy – it is a golden opportunity to reshape the future of India’s commercial vehicle industry. By retiring older, less efficient vehicles, we pave the way for safer roads, cleaner air, and a stronger and more sustainable economy.