Vehicle Scrapping Facility Draft Guidelines Issued

The Road Transport and Highways ministry has recently issued draft guidelines for operating vehicle scrapping facilities in the country stating minimum requirements for a scrappage facility for collection and dismantling of vehicles under the guidelines issued by the Central Pollution Control Board.

The draft guidelines is expected to be followed by the scrappage policy likely to be announced later this month.

The guidelines doesn’t talks of incentives for vehicles owners to voluntarily scrap vehicles.

Key highlights of policy

The facility should have usable treatment area of 4,000 square meter (for treatment of category L motor vehicles) and a minimum 8,000 sqm (for treatment of all type of vehicles including categories L,M,N) of land in orange category industrial land

• Should be in possession of IT system to access VAHAN database
• Processing fee of ₹1 lakh
• Earnest Money deposit of ₹10 lakh
• Authorisation to be valid for an initial period of 10 years

Criteria for scrapping

The following vehicles may be offered for scrapping:

• Not renewed original certificate of registration in accordance with Rule 52 of Central Motor Vehicles Rules (CMVR)
• Not granted certificate of fitness in accordance with Rule 62 of CMVR
• Vehicles damaged in fire, accident, natural disaster etc
• Declared obsolete or beyond economic repair
• Vehicles bought in an auction for scrappage
• Vehicles which have outlived their utility operating in areas like mining, highways, power, farms etc
• Manufacturing rejects and test vehicles
• Impounded and abandoned vehicles by Enforcement Agency

Scrappage policy may not revive demand

India Ratings and Research believes the vehicle scrappage policy, on implementation, would improve demand for used commercial vehicles (CVs) but not contribute meaningfully to revive demand for new CVs in the short term.