Human race is standing at a critical junction at the start of a decade that has been touted as the ‘decade of action’ by many. Our actions now will decide the future of our planet and all its inhabitants including us. The global pandemic, the rapid advancement of technology, and digital saturation have been taking us through dramatic shifts of development where the main driver of the tide is sustainability. Transport is no exception to this wave of transformation where every involved stakeholder is striving to reshape it as more sustainable, economically, and logistically optimized. Global leaders including India has pledged together to cut down GHG emission to keep the global temperature below 1.5 degree and transport is the first target of action due to its significant share in the total GHG emission. India is a growing economy, in 2020, India was the fifth-largest auto market and domestic automobile sales increased at 1.29% CAGR. By 2025, India’s expected to become the third-largest auto market and per capita car ownership will increase like every other growing economy. On the other hand, the nation will account for almost 22 million obsolete cars by 2025. The overabundance will also result in a severe shortage of raw materials for manufacturing given the country’s heavy import dependency at present on raw materials to manufacture.
In light of the current situation, the Indian government introduced Vehicle Scrappage Policy 2021 or Voluntary Vehicle Fleet Modernisation Programme to herald the sustainable and economic transformation of India’s transport to decrease import dependency by localizing raw materials, mitigate environmental damage, and enhancing road safety. The policy intends to unphased unfit vehicles after authorized tested validation through Registered Vehicle Scrapping Facility (RVSF). The policy if implemented properly has a very ambitious vision to cut down emissions by 20-25% and give an encouraging 30% boost to the automobile demand in the nation. This is also expected to be a source of revenue for both state and national governments and generate huge amounts of employment and infiltrate advanced technology and increased investment in coming times.
As World’s first policy and development media, The Policy Times organized a National Conference on India’s Sustainable Mobility in light of India’s introduction of the recent Vehicle Scrappage Policy 2021 on Friday, 24th September 2021 online. The Organizing Partners of this E-Conference were – Material Recycling Association of India (MRAI) & MONO STEEL INDIA LIMITED. The National E-Conference yielded a 360-degree analysis of the policy through active engagement and deliberation of stakeholders of various sectors from policymakers, to auto industry leaders, OEMs, recyclers, etc.
Industry Perspectives, Reactions & Expectations:
The world is moving towards a circular and environmentally viable economy today and in this context transport is a crucial pillar of the modern world. The Vehicle Scrappage Policy 2021 has opened up a horizon of possibilities. The systematic and centrally integrated, digitized people-centric process has the potential to bring responsible and scientific scrapping of unfit cars to the benefit of every stakeholder involved in creating a competent and competitive revenue-centric ecosystem. However, the present vehicle-scrapping ecosystem in India is largely an unorganized sector hindering the introduction of higher technology, scientific method, global safety standard, and the highest rates of recycling. As compared to the 85-95% recycling rates of developed countries India currently has 75% recycling rates, however scrapping the cars does not ascertain the recyclability and reusability of the vehicles, so a detailed scientific process is required to achieve that vision. Stakeholders of various levels need to integrate themselves slowly to bring a skilled, competent, and competitive ecosystem.
Recommendation & Suggestions for Implementation, Circulation & Compliance:
- Stakeholders: The scrap sector largely consists of unorganized informal stakeholders. Skilling them to slowly integrate with other range of players and formally reorganizing the sectors will bring a balanced ecosystem. These informal stakeholders can also supplement the lack of a Registered Vehicle Scrapping Facility (RVSF) at the initial stage.
- Scrapping is Not The Only Option: Today’s generation vehicles are highly technologically advanced, digitized, and durable age should not be a criterion of their fitness. This also suggests scrapping is not the only option for ‘unfit’ vehicles they can be refitted or reassembled into perfectly healthy vehicles.
- End-to-End Scientifically Defined Process Mandate To Ensure Recycling & Reutilization: Scrapping does not necessarily ensure recycling & reutilization. In India, after a vehicle is scrapped in many cases the remains are simply dumped with the bare minimum extraction of valuables hence a step-by-step mandate to ensure maximum recycling and reutilization is necessary to achieve the desired vision painted by the policy.
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- Quantify The Whole Process For Comprehensive Approach: Scrapping of ‘unfit’ vehicles is positive and beneficial to a certain degree however it is not without negative impact, for example, scrapping does have a negative environmental impact, hence quantifying step by step process is necessary to identify long term solution with maximum benefit.
- RVSFs to be brought under Startup Category: If the scrapping facilities could be brought under the startup category they could scale up to be a complete and self-sustaining unit in the future.
- Sector Specification: Specifying the sector of the RVSFs further could bring them under the protection and incentives, special funds from that sector
- Recycling Different Materials Under One Roof: Recycling different materials under one roof could give recyclers value addition to their business.
- Compensation to AVSFs as organized recyclers by OEMs under Extended Producer Responsibility Scheme
- Special incentives to foreign collaborators for the establishment of RVSFs etc.
- Active Participation from Insurance & banking sector stakeholders
- Incentivizing Logistics Cost by the Way of Recycling Cess
- Sustainability Support From State or Central Government in compensation for Carbon Emission Reduction like MEIS or Duty Drawback Scheme
- Import of Scrap To Meet Demands for RVSFs: At the infant stage of the project only scrap from domestic sources will not sustain recycling facilities or meet the demand for secondary resources. Import of scrap could provide a steady, low-cost resource to the stakeholders.
- Clearly Defined Process for The RVSFs: The step-by-step process after a vehicle is declared unfit is necessary for RVSFs to process. For example, after a vehicle is declared unfit, who auctions it, is it the RVSF’s or the vehicle owner’s responsibility?
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- Defined Role, Responsibility & Accountability: The process should be made clear step-by-step where the role, responsibility, and accountability of every stakeholder from OEMs, brand owners, manufacturers, and the pollution control board is clearly defined. Loopholes in the process could hinder the outcomes.
- Manufacturer Responsibility to ensure the recyclability and reusability of components used in vehicles as without defining that the policy would not achieve its purpose.
- Tax Waiver for Foreign Technology: Foreign technology is a must to revolutionize India’s scrapping industry and a tax waiver for that is necessary.
- Transparent Process: The entire process should be transparent to increase acceptance and participation.
- Value Edition to Business: The environmental and safety mandates should not challenge the scale or proportion of business.
- SEZ for Vehicle Scrapping: Finally an SEZ for scrapping could minimize logistics, invite investment and collaboration, optimize shared resources, etc.
The Vehicle Scrappage Policy 2021 could be a catalyst to a chain of positive impacts only if it is implemented successfully. Successful implementation requires the acceptance and participation of every stakeholder. Stakeholders could by default increase their active participation and compliance if their role, responsibility, and accountability are defined clearly.
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[The Policy Times proposes to organize another National Conference to engage state-level stakeholders [policymakers, local leaders, recyclers, RTOs, etc.] to better understand local implementation issues, empowering them, bringing global best practices, technology at the grassroots level and facilitate investments in the sector.]
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Hon’ble Speakers & Contributors
- Gen (Dr) Vijay Kumar Singh [PVSM, AVSM, YSM (Retd). Chief Guest], Honourable Minister of State, MORTH & Civil Aviation, Gov’t of India
- Shri Paresh Kumar Goel, Director (Transport & IC), Ministry of Road Transport & Highways, Gov’t of India
- Mr. Sanjay Mehta, President, Material Recycling Association of India
- Mr. PK Banerjee, Executive Director, Society of Indian Automobile Manufacturers (SIAM)
- Mr. Arindam Lahiri, CEO, Automotive Skills Development Council
- Dr. P Sekhar, Chairman Unleashing India, Global Smart City Panel, MTGF
- Dr. Kanakasabapathi Subramanian, Sr. Vice President, Ashok Leyland
- Dr. Sushil S. Ramdasi, Deputy Director, Automotive Research Association of India (ARAI)
- Shri Kiritbhai M. Soni, President, Saurashtra Chambers of commerce & Industries Bhavnagar
- Mr. Vikrantt Mohan, President, All India Automobile Workshops Association
- Mr. SK Mittal, Chairman, All India Motor Transport Congress (AIMTC)
- Mr Haresh Parmar, Honorary Secretary, Ship Recycling Industries Association
- Mr. Amar Singh, Secretary General, MRAI
- Mr. Tejas Shah, Business Development Officer, Mono Steel India Ltd.
- Ms. Shubika Sardana, Associate, Kearney
- Mr. Ashish Bhagra, COO, CERO-Mahindra MSTC Recycling Pvt Ltd
- Mr. Sameer Malhotra, Director & CEO, Shriram Automall India Ltd (SAMIL)
- Mr. Debartha Banerjee, Co-Founder, Sampurn(e)arth Recycler
- Mr. Akhilesh Srivastava, Global Expert New Mobility & Tech driven Road Safety 2.0
- Mr. Auszad Shaik, General Manager, Andhra Pradesh Maritime Board
- Dr. Tausif Malik, Founder, Startup Villages
- Mr. Akram Hoque, Founder Editor, The Policy Times
