SIAM calls for solid policy on scrapping of old cars

By Anil Mathews

NEW DELHI (Scrap Monster): The Society of Indian Automobile Manufacturers (SIAM) has urged the government to formulate a solid policy on scrapping of old cars. The industry body alleged that the country currently has no organized system or guidelines to scrap and dispose of old vehicles. A clear policy in place could do a lot in streamlining the car scrapping activities in the country, it noted.

According to SIAM, the country’s car scrapping activity is mostly handled by local scrap yard and garage owners. Most of these scrap markets follow unhealthy practices to dismantle old vehicles. There exists no government infrastructure to handle large-scale scrapping of old vehicles. The lack of concrete policy prevents private firms from entering into the business, SIAM noted. Incidentally, estimates indicate that the country has nearly 30 million vehicles on road that are older than 25 years.

The body called upon to government to introduce strict guidelines on old vehicle scrapping. It noted that government should announce incentives to owners who are willing to scrap their vehicles after 15 years of use. Presently, the government levies Green Tax when vehicles older than 15 years are re-registered. However, the rules by Regional Transport Offices (RTOs) vary from state to state.

The government must offer incentives and tax benefits while buying new cars in exchange of scrapping 15-year old cars. SIAM reminded that such systems have been successfully implemented in developed countries like the US, where owners of old cars are given incentives and tax benefits when they buy new car by scrapping the old one.

In an attempt to control air pollution, the government had recently announced scrapping of diesel vehicles older than 15 years. In another development, the Ministry of Road Transport and Highways has already submitted a vehicle scrapping policy to the Finance Ministry. The proposed plan recommends 8-10% of the cost of new vehicle to be provided as incentive for those surrendering their old vehicles and will be applicable to all vehicles bought on or before March 31, 2005. As per sources, the proposal is currently under the review of the Finance Ministry and will be forwarded to the Cabinet upon approval.

Meantime, reports indicate that the state-run MSTC Ltd has entered into an agreement with Mahindra Intertrade to set up India’s first auto shredding and recycling plant. Also, MTSC is in the process of making a draft Scrap Policy in India which will cover generation, storage, recycling and utilization of ferrous and non-ferrous scrap materials including handling, recycling & disposal of hazardous related materials/e-waste.

The new plant is expected to commence commercial production by March 2018 and will have a capacity to process 100,000 to 150,000 tonnes. The proposed plant will have automotive recycling capabilities including collection, compaction, transportation, depollution, dismantling, shredding, recycling and disposal. The facility will be equipped to scrap ships and machines too. The joint venture will initially set up its first plant either in the state of Gujarat or Maharashtra. It intends to open similar shredder facilities across the country, in future.

The recycling of steel from auto shredding will lead to drastic reduction in scrap import volumes, which in turn may lead to significant reduction in foreign exchange outflows.