Draft guidelines for authorised vehicle scrapping centres soon

India has fast tracked norms for creation of formal vehicle scrapping centres and the government will soon announce a voluntary vehicle scrappage policy and wants a stringent framework in place for setting up of centres that will carry out scrapping.

The government is set to float new norms that will make way for formalising vehicle-scrapping sector, laying down strict parameters for setting up one of these units, as it prepares ground for voluntary vehicle scrappage policy in the country. "The government is preparing a scrapping policy but how will it take off if there are no scrapping centres," a senior government official said.

Those willing to set up scrapping centres in the country will need to comply with these guidelines being prepared by the transport ministry, which have been formulated after consultation between ministry of environment, forest and climate change and the ministry of steel, the official, privy to the development, told ET.

The voluntary vehicle scrapping policy is expected to revive the auto sector out of its current and worst slump in the last 20 years and create demand for new vehicles.

The guidelines for scrapping centres will ensure that these units comply with environmental norms as most of the existing ones, largely in the informal sector, are heavy polluters.

"The guidelines will ensure that the details of the scrapped vehicles are linked with the VAHAN (vehicle database of transport ministry) and the vehicles are de-registered at the scrapping centre itself so that people do not have to visit RTOs," said the official. "This will initiate ease of doing business." These centres will also issue scrapping certificates to vehicle owners.

Car makers will also be able to come forward and set up their own scrapping centres, which will in turn also promote their car sales. "OEMs can offer discounts on a new vehicle if a vehicle owner uses the company’s scrapping centre," said the official. There are no direct incentives that the government will provide for setting up scrapping centres.

The guidelines will mandate that a scrapping centre has permission from the state transport departments and the owner will need to furnish earnest money deposit (EMD) to state governments.

"The amount of the EMD is not yet decided but it is proposed to be anywhere from Rs 10 lakhs to Rs 1 crore," said the official. "A smaller amount will ensure that even the unorganised scrapping units can come on board."
The draft guidelines are expected to be out for public comments this month, before the scrappage policy is announced.

The guidelines will mandate that scrapping centres can only be set up in industrial areas and not in busy, residential areas in the country.

The National Green Tribunal (NGT) earlier in July noted that the number of 'end of life vehicles' will be over 21 million by 2025. Approximately nine million vehicles, of which 75% are two-wheelers, will be due for scrapping by next year, the NGT noted.

The government is also looking at these scrapping centres to create employment in the country, with each centre requiring around 25 people.