A scrappage program is a government budget policy to promote the replacement of old vehicles with modern vehicles. Scrappage policy generally have the dual aim of stimulating the automobile industry and removing inefficient, more polluting vehicles from the road.
India’s vehicle scrappage policy, which is awaiting its final clearance from the Union cabinet, would focus on eliminating the fleet of old polluting commercial vehicles plying on the country’s roads. A well-defined vehicle scrappage policy in India can help create an industry of its own with a business opportunity of $6 billion (Rs 43,000 crore) a year, say automobile sector executives and experts. This policy would cover all segments, including cars and two-wheeler and not just commercial vehicles. Different countries have introduced Scrappage Policies click here to read its affect on other countries.
The medium and heavy commercial vehicles segment is the worst-hit following the allowance of extra load-carrying capacity of trucks last year with the introduction of axle load norms read more about axle weight increase norms. This was followed by a general slowdown in key sectors such as real estate, infrastructure, mining and others. According to the Society of Indian Automobile Manufacturers (Siam), wholesales or factory dispatches of medium and heavy-duty trucks fell over 41% year-on-year during April-November. During the same period, the commercial vehicle industry posted a 22% decline in sales.
The commercial vehicle owners will have tough time scrapping older vehicles, not just owners but local mechanics will also get affected, as they usually repair older vehicles, whereas new vehicles are being brought under OEM’s AMC. As the country is facing slowdown, worst hit among other industries are trucking industry. Apart from other areas where a trucker is getting hit like, driver shortage, production slowdown, costlier new vehicles. Considering larger benefits to country the policy is necessary. Increase in the renewal of registration fees of vehicles older than 15 years will discourage the use of older polluting vehicles, including passenger vehicles
The draft guidelines on Authorized Vehicle Scrapping Facility (AVSF) in India will help in setting up of such facilities in an organised manner