India initiates steps to scrap old vehicles starting 2022

Singapore — India has begun plans to implement a vehicle scrapping policy in 2022 that will see the mandatory scrapping of commercial vehicles that are 15 years old or more, the Ministry of Road Transport & Highways said March 18.

The policy could result in the setting up of 100 vehicle scrapping centers in India over the next one-and-half to two years, Indian Minister for Road Transport & Highways Nitin Gadkari said, describing each of them as a "Registered Vehicle Scrapping Facility" in a proposed draft.

The move came after the ministry approved on Jan. 25 a policy to deregister and scrap vehicles owned by government departments that are older than 15 years. The policy takes effect on April 1, 2022.

"The Voluntary Vehicle-Fleet Modernization Program or "Vehicle Scrapping Policy"... is aimed at creating an ecosystem for phasing out of unfit and polluting vehicles," the ministry said.

"The new vehicle scrapping policy will present a win-win situation for all stakeholders," Gadkari said, a view reflected by market sources that told S&P Global Platts the policy potentially increases supplies for both prompt and obsolete material, which would then benefit the growing Indian steelmaking industry.

"Overall, this vehicle scrapping policy could mean a lot more domestic [scrap] supply growing, but it would take time ... perhaps another three years minimum," an Indian trader told S&P Global Platts. "The speed of how fast this policy takes flight also depends on how much boost is injected. And we need a lot more infrastructure to deal with this overhaul, like building shredder plants too."

There will be no shortage of vehicles for scrapping as India has about 3.4 million light motor vehicles that are more than 15 years old and about 1.7 million medium and heavy commercial vehicles of similar age, the minister said.

Rules to assess the vehicles' roadworthiness and set up scrapping centers could be ready as early as Oct. 1, followed by mandatory scrapping of government vehicles by April 1, 2022. Rules for determining the roadworthiness of heavy commercial vehicles are scheduled to be ready by April 1, 2023.

The ministry estimated that the scrapping system will need about Rupees 100 billion ($1.38 billion) in investments.