The newly introduced scrappage policy in India would result in a 30pc growth in the auto sector, according to Nitin Gadkari, Minister for Road Transport & Highways. He noted that this will result in a turnover of approximately Rs10tn ($0.14tn) for the industry over the next few years, compared to the current turnover of Rs4.9tn.
The scrappage policy would benefit buyers of new vehicles, voluntarily opting to scrap their 30-year-old vehicles. The old vehicles will have to go through mandatory and strict fitness tests at auto facilities before being scrapped. Not only the economy and auto sector is expected to benefit from this policy, but vehicular pollution is also expected to be reduced.
The vehicular scrappage policy would increase the flow of domestic scrap volumes. A boost in production of automobiles will push consumption of steel and other metals and alloys required to manufacture vehicles.
The raw material cost is expected to decrease by almost 30-40pc on the back of scrap materials like aluminium, plastic, rubber and steel being available from the scrapped vehicles, said Gadkari adding that around 10mn vehicles are expected to be scrapped.
In the Union Budget 2021 presented on February 1, India’s Finance Minister had said that scrappage policy will be released soon.
($1 = Rs72.9)