Prime Minister Narendra Modi on Friday formally launched the new National Automobile Scrappage Policy at an investors' summit held by the Gujarat government. The Prime Minister said the new policy would attract investments worth Rs 10,000 crore. The policy would help in getting rid of unfit and polluting vehicles in a scientific manner Modi said at virtual Investor Summit held in Gandhinagar on Friday.

       The policy would help in getting rid of unfit and polluting vehicles in a scientific manner, said Modi at the virtual Investor Summit held in Gandhinagar on Friday

       The policy is an important step forward for the environment as not only would it contain the air pollution caused by the older vehicles, it will also check the enormous damage clunkers can cause, said environmentalists.

       “Retiring old, jaded vehicle is extremely essential and this was a much needed step,” said Sumit Sharma, Sumit Sharma, Director (Earth Science and Climate Change Division) at The Energy Research Institute. Share of vehicular pollution in Delhi is 23 per cent and fleet modernization can reduce this to 16 per cent, he said.

       Anumita Roychowdhury, executive director at think-tank, Centre for Science and Environment concurs: “An old BSI truck emit 36 times higher particulates compared to a BSVI truck. It is also necessary to link replacement of personal vehicles with electric vehicles to help move towards zero emissions goal," she said.

       But the policy doesn’t bring an immediate cheer to the pandemic bruised auto industry. The scrappage will take effect in a phased manner and is unlikely to propel the overall sales of cars or commercial vehicles anytime soon. Among other things, it will have to trickle down to states which in turn have to implement them after ensuring availability of requisite infrastructure, said auto industry executives and analysts.

       RC Bharagava, chairman at car market leader, Maruti Suzuki India lauded the move but added its impact will not be seen anytime soon. “It is impossible assess the impact of the policy on car sales as its still far away. The good thing is, we now have a scrappage policy to start with,” he said.

       The whole exercise of scrapping the old vehicles will begin from 1 October 2021 after the rules for fitness scrapping centre is released. It will be followed by starting fitness testing for government and public sector undertaking vehicles on April 1, 2022. The fitness testing for heavy commercial vehicles will commence on 1 April 2023 and rest of the segments will begin from June 1, 2024.

       Taking 1990 as the base year, at present around 3.7 million lakh commercial vehicles and 5.2 million passenger vehicles are eligible for voluntary scrapping, said Harshwardhan Sharma, head—auto retail practice at Nomura.

       Ashish Suman, Partner, J Sagar Associates said, “The success of the policy will hinge on the state governments support, creation and availability of the scrapyards infrastructure, collaboration between government and corporates in developing the infrastructure and most importantly policy for waste disposal management to avoid environment concerns which was the centre theme for introducing the policy.”

       As part of the policy the government was also looking to provide some concessions on road tax. "The families would also be able to save on costs of maintenance, repair of the vehicle with better fuel efficiency. This policy would benefit common-man in all manner," Modi said in his address.

       Dwelling on scrap import, Modi said that India imported scrap steel worth Rs 23000 crore last year since scrapping in the country is not as productive and carries zero energy recovery. Also, the new scrappage policy recognizes the workers at scrapping facilities and small businessmen, who can become agents for authorized scrapping centers.

       According to Roychowdhury, the environmental damage from clunkers can be enormous. Unscientific disposal can lead to huge wastage of material that can otherwise be brought back as a resource. If dismantled properly it is possible to recover low cost material for the automotive, steel, and electronics industry among others. “Strategic replacement of very old trucks and buses can reduce emissions significantly.

       The auto and metal industry is set to get a big boost with the policy, which would make scrap steel available locally, said Modi. "Gujarat has witnessed the benefits of ship recycling, while it can also become a big hub of auto scrapping," he added. India currently has 10 million cars without valid fitness parameters, thereby adding to pollution and fuel costs, said Union Transport Minister Nitin Gadkari in his address.

       "Therefore, we thought of bringing a scrappage policy. Replacing old vehicles with new ones will benefit the environment by 10-12 per cent. The new scrappage policy will generate direct and indirect employment for about 50,000 people," said Gadkari.