Automobile Scrappage Policy

Most of the automobile's environmental impact, perhaps 80 to 90 percent, is due to the fuel consumption and emissions of greenhouse gases and toxins which is leading to air pollution which increases global warming. The performance of vehiclesconcerning energy efficiency and detrimental emissions have shown continuous improvement. The shorter is the average lifetime of vehicles, the lower will be the energy consumptionand emission of pollutants.


 A scrappage program initiated by the government will promote the replacement of old vehicles with modern vehicles. It aims at stimulating the automobile industry and removing the inefficient and more polluting vehicles from the road. (


This program is beneficial to the automobile user, automobile industry, and especially to the environment. The domestic automobile industry has been in a protracted slowdown for over two years now. Vehicle sales declined by 18 percent in 2019-20, the worst in over two decades, and is slated to decline by another 26-45 percent in this fiscal. It would peg the industry back by over a decade. The sale of heavy trucks and buses, which is considered a barometer of the overall economy is the worst impacted. ( Vehicles that are old beyond 15 years have an extremely low resale value and are also more polluting to the environment as compared to the latest ones. These vehicles can be sent to the scrapyards and some monetary compensation can be given to the owners ensuring that they get rid of their old vehicle and purchase a new one. This will be beneficial for the automobile industry as it will boost the demand for new vehicles in the market and scrap material like aluminium and steel can be reused for manufacturing new materials and will be available at cheaper rates. The government could save forex as there will be a highly decreased requirement for the importation of raw materials. A big challenge will be to get rid of materials that cannot be reused and are also harmful to the environment. (


The mandatory de-registration will phase out pre-BS stage vehicles, BS-I vehicles, and BS-II vehicles mainly from Delhi NCR and major cities. All BS-I and pre BS-I vehicles nationwide will be phased out.A BS-I diesel car emits 31 times more particulate matter than a BS-VI diesel car and a BS-II diesel car emits 17 times more particulate matter than a BS-VI counterpart. At present, except for Delhi, India does not have a cap on vehicle life; and a vehicle may be used on the road as long as the owner deems fit.As per the Ministry of Road Transport and Highways (MoRTH) estimates, pre-2000 commercial vehicles (CV) are responsible for over 15% of GHG (Green House Gases) emissions from the CVs. CVs contribute to 73% of the emissions from the road transport sector which in turn is responsible for about 12% of overall emissions in India. Hence, phasing out these old vehicles will have a significant environmental impact in terms of the reduction of pollutants from vehicle exhausts, it will also reduce the government’s oil bill as the new vehicles will be more fuel-efficient. (


A study by HDFC Bank has estimated the market for vehicle scrappage and recycling at $6 billion. If defined well around 9 million vehicles could go off roads by fiscal 2021 and 28 million by 2025, largely comprising two-wheelers, it said. It would reduce carbon dioxide emission by 17 percent and cut particulate matter in the air by 24 percent. Further, if half the Bharat Stage-II and III vehicles go off the roads, it would save 8 million tonnes of oil a year. As per Mr. Ashok Khanna, A comprehensive scrappage policy will result in a reduction in costs, save foreign exchange, and increase revenues in the long term. (


Considering the present scenario in India, the criterion of ‘Age’ for implementing scrappage may be the most cost-effective method to derive the maximum environmental benefitsThis policy could generate fresh employment and economic growth.

Reva Bhardwaj
Intern Analyst (Environment and Climate change) at MSME Business Forum India