Vehicle scrappage policy has been many years in the making; the first draft being published in 2016. Yet there has been a significant delay in the implementation. One of the main reasons for the delay in the finalisation was inability of the government and vehicle manufacturers to agree on the incentive that could be provided for scrapping old vehicles. Nonetheless, the policy is again being talked about and may be here sooner than expected.
The main idea behind introducing this reform is to curb pollution due to vehicles, which are more than 15 years old and have become non-compliant to all the new pollution norms and practices being followed today. But for an automotive industry insider, “curbing pollution” may not be the only silver lining to this cloud.
The policy will also aim to pump in life to a dying automotive sector, even before the COVID-19 pandemic had struck. The size of the automobile industry is Rs 4.5 lakh crore out of which Rs 1.5 lakh crore are exports. With the automobile industry all set to go for a revamp by the introduction of this policy, the opportunities have become endless. It can be said that a whole new market is going to open up. According to a report published in a leading newspaper, an incentive-based policy will help in mitigating pollution, improving road safety, and conserving fuel. And more importantly in the current context of impact of COVID-19 on the Indian auto sector, also could kickstart demand.
The move will boost demand for new automobiles by phasing out old and polluting vehicles. As said by the Minister of MSMEs, Mr. Nitin Gadkari, “India will become a hub for automobile industry once the policy is cleared. This will lead to a reduction in prices of vehicles as the recycled material from scrapped vehicles can be used to make new automobiles thereby reducing input costs. We will take scrap from all over the world and here we will make an industry where we can use all new material and cost will be less and industry will be more competitive.”
To put this into simpler terms, consider this; your vehicle is older than 15 years, so you have to scrap it. In exchange for your vehicle, you will be provided with a compensation. The scrap which will be generated from that vehicle will be recycled, which generally would cost less than new raw material. Hence, it will automatically reduce the manufacturing cost of new vehicles. So, the benefit will be passed on to you indirectly. This will also benefit the manufacturers and automotive component suppliers since many vehicles will come off roads, generating a lavish demand for new vehicles.
The scrapping of older vehicles might not be easy for everyone, especially people with limited income for whom owning a new car in today’s time is extremely tough. But as it is rightly said, change is the only constant.
So it would only be fair to quote Socrates, “The secret of change is to focus all of your energy not on fighting the old, but on building the new.”
Hence, for anybody reading this who is looking to procure rubber and plastic components for all your requirements, automotive or otherwise, get in touch with our sales team today!