Vehicle Scrapping: More sops to boost scrapping of old vehicles in works

India is looking at extending additional sops for scrapping old vehicles amid a lacklustre response from owners to the current set of incentives, according to officials aware of the move.

The government has initiated a comprehensive inter-ministerial review of the registered vehicle scrapping facility (RVSF) policy to examine the issues and identify additional incentives. The registered scrapping centres are unable to attract most owners of old vehicles since the unorganised sector offers better value, the officials said. According to official data, 100,000 vehicles have been scrapped since the scrappage policy came into force in 2021 until June this year.

“The registered scrapping facilities are working at just 10-15% of their nameplate capacity,” a senior government official told ET. “The unorganised sector salvages each component of an old vehicle and is therefore able to offer a much better value than an RVSF to owners.”

Among the options on the table are raising or even doubling rebates on the registration charges for new vehicles. Under the existing policy, the Centre offers a concession of up to 25% on motor vehicle tax if a new vehicle’s buyer has a scrappage certificate from an RVSF. Besides, the Centre said in August that commercial and passenger vehicle manufacturers can offer additional discounts against these certificates.

Inputs have also been sought from stakeholder ministries to make the scheme more effective on the ground. India currently has 65 operational vehicle scrapping centres, while another 57 have been approved.

According to the Ministry of Road Transport and Highways, commercial and passenger vehicle makers have indicated that they’re willing to offer discounts for up to two years against scrappage certificates.

Car makers are currently said to offer a 1.5% discount on the ex-showroom price of budget-model vehicles or ₹20,000, whichever is less. A German luxury car maker offers a flat rebate of ₹25,000, over and above other discounts.

The steel ministry, which wants to improve the availability of scrap, is also pushing for better deals for owners of older vehicles.

“Recycling scrap is an effective way to manufacture low emission or ‘green’ steel,” an official said. “Globally, countries are imposing curbs on scrap exports to make steel making more efficient in their territories.”

India is also evaluating measures to make more scrap available for the steel sector, he said.