India has been building and slowly phasing in a national vehicle scrappage policy since 2015. The goal is to phase out vehicles that are in the 15-20 year age range or older and incentivize new vehicle purchasing in order to lower the country’s carbon footprint. This policy also strives to “create an ecosystem for phasing out unfit and polluting vehicles”, make key raw materials more available, improve air quality and traffic congestion, and generate employment opportunities in the auto sector.
Transport-related air quality challenges have long plagued India. The country and its individual states have attempted various creative initiatives to reduce pollution, but none as comprehensive or permanent as this current scrappage policy.
The city of Delhi, ranked one of the world’s most polluted cities each year, has historically implemented limits on vehicle usage during periods of extremely low air quality since 2016. In November 2023, around the week of Diwali, the city’s government put in place alternating odd/even days. During this week, vehicles on the road were limited by whether or not their associated registration number was odd or even.
Despite the government’s desire to address and mitigate this immense threat to human health, the country has struggled to make meaningful, lasting change.
According to the 2019-2021 National Family Health Survey (NFHS-5) only 8% of households own a car. Despite this low number, especially in comparison to rates of household vehicle ownership in the U.S. at a staggering 91.5% (2020), much of this vehicle ownership is concentrated in urban areas which leads to problems with traffic congestion. Motor bikes are a much more popular transportation option in India, to which this scrappage policy will also apply.
As of April 2023, the Minister of Union Road Transport and Highways told the media that 11,025 vehicles have been scrapped by registered facilities; the breakdown of this number includes 7,759 private vehicles and 3,275 government vehicles.
The first target, implemented in April 2022, aimed to scrap all government-owned vehicles over 15 years of age regardless of their performance on fitness tests.
The next phase of this policy initiative targets heavy commercial vehicles starting in April 2023. These vehicles require a ‘fitness test’ twice in their first 8 years and each year after that. The first time the vehicle fails a fitness test you will be given the option to repair and re-test; if it fails this subsequent test then it will be deemed an End of Life Vehicle (ELV).
Similarly, private, non-commercial vehicles can be driven past 15 years of age if they clear a fitness test that will then be valid for 5 years. Fitness tests are required by the time the private vehicle reaches 15 years of age. The scrappage policy’s application to private vehicles is set to begin in June 2024.
Two-wheelers require a fitness test after reaching 15 years of age. If deemed unfit, the owner can either scrap the vehicle or repair the bike and re-test. It is unclear when exactly it will become mandatory.
The government is offering participants a road tax rebate of up to 25%, a 5% discount from manufacturers on newly purchased vehicles, and the waiving of new vehicle registration fees. In India, road taxes are paid to states at the time of purchase based on factors including vehicle capacity, purpose, and weight. It is important to note that the central government has recommended these incentives to states but it is ultimately up to the individual states if they will implement them as recommended, particularly related to the reductions in road taxes.
The combination of road tax and registration fees can increase vehicle price as much as 10%, so this incentive offered by the government scrappage program is significant, with the potential to total a few thousand dollars all-told.
Further, it appears that thus far scrappage is particularly attractive to those that have a vehicle with a lapsed registration sitting at home. It was previously extremely difficult to get the necessary paperwork for reselling a vehicle originally registered in a different state, but this program has simplified and streamlined the paperwork process in order to appeal to this precise subset of vehicles. India-based automotive blogs, in which users detail their experience with the program thus far,make the case for this scrappage policy as a hassle-free way to get rid of your vehicle legally.
In order to fully implement this scrappage policy, India has worked to authorize and standardize the disparate world of dismantlers throughout the country. This effort has also included establishing a widespread network of Automated Testing Stations (ATSs). This is a computer generated emissions test, such as what we are familiar with in the U.S., aims to put an end to nefarious human interventions. The validity of one’s registration will be linked to the vehicle’s fitness certificate.
The country appears to have fairly successfully established widespread ATS facilities, but the availability of approved program dismantlers remains a barrier to full implementation.
Regardless of the long-term policy effects, this network of facilities and implementation of standardized procedures for vehicle emissions testing should be seen as a win for India in their quest to modernize their automotive fleet.
As indicated in the video above, published mid-2023, naturally there is some public opposition to this new policy. In this clip, the host points out that the policy doesn’t account for the full carbon cost of the production of the vehicle and its materials.
Further, this policy won’t be effective at reducing air pollution when there are so many other, relatively unregulated sources of air pollution including construction and the burning of agricultural fields.
SHiFT is keeping an eye on the uptake of this program and its impacts on the country’s transportation-related emissions. Regardless, this program reveals challenges very familiar to vehicle retirement in the United States: balancing widespread retirement with appropriate environmental treatment in the process, the responsibility of states versus central government, and the challenge of assigning the responsibility of issuing paperwork across States with diverse systems.
