As the world’s fifth-largest economy with a GDP of $3.89 trillion, India is on track to become the third-largest economy by 2030, according to S&P. The nation’s robust automotive industry, particularly its commercial vehicle (CV) segment, plays a vital role in driving this growth. However, as India’s economic engine accelerates, the environmental and safety challenges associated with aging vehicles demand urgent attention, says, Satyakam Arya, Managing Director & CEO, Daimler India Commercial Vehicles (DICV). The Vehicle Scrappage Policy—a transformative initiative, poised to redefine India’s roads and reshape the future of its commercial vehicle sector, he noted.
Rising Freight Demand & Its Environmental Impact
India currently moves approximately 4.6 billion tonne of freight annually, a figure expected to more than double to 9.6 billion tonne by 2050. Road freight dominates this movement, with about 70% transported by four million trucks, primarily medium and heavy-duty vehicles. By 2050, the number of trucks is projected to quadruple to 17 million. While this growth signals economic progress, it also raises alarms for the environment, as older trucks account for nearly half of on-road CO2 emissions, he observes.
Most of these vehicles fail to meet Bharat Stage VI (BSVI) emission standards, comparable to Europe’s Euro-6. Their continued operation intensifies air pollution and exacerbates climate challenges, making the government’s Vehicle Scrappage Policy a critical step in mitigating environmental harm.
Policy Rooted In Progress
The Vehicle Scrappage Policy mandates that commercial vehicles older than 15 years undergo fitness and emission tests. Vehicles failing these tests are deemed End-of-Life Vehicles (ELVs) and must be scrapped. The policy aims to reduce pollution, enhance road safety, and revitalise the automobile industry by encouraging the adoption of newer, cleaner, and safer vehicles.
According to ICRA, over 1.1 million medium and heavy-duty commercial vehicles have already crossed the 15-year threshold, with an additional 570,000 set to follow by FY26. The policy thus serves as a lifeline for India’s commercial vehicle sector and society at large, laying the foundation for a safer, greener, and more efficient transportation ecosystem.
Safety First: Modernizing India’s Roads
India’s roads are burdened with aging trucks and buses, which are not only inefficient but also hazardous. Older vehicles are significantly more prone to accidents due to mechanical failures, particularly in braking and steering systems. The Ministry of Road Transport and Highways has repeatedly emphasised the risks posed by these vehicles.
By phasing out such vehicles, the Vehicle Scrappage Policy addresses these safety concerns head-on. It’s not just about retiring old machinery—it’s about saving lives and ushering in an era where safety, sustainability, and economic growth coexist, Arya observes.
Cutting Emissions: A Cleaner Tomorrow
The pollution disparity between old and new vehicles is staggering. For instance, a BS-III-compliant vehicle emits nearly 40 times more particulate matter than a BS-VI vehicle. In cities like Delhi NCR and Mumbai, where air quality is a critical issue, the policy’s focus on replacing outdated vehicles is pivotal. By removing polluting vehicles from the roads, the policy offers a clear path to cleaner air and healthier cities.
Efficiency & Profitability: Raising The Bar
Modern vehicles offer more than just environmental benefits—they also deliver operational efficiencies. According to him, BharatBenz trucks boast up to 20% better fuel efficiency than older models, translating to substantial cost savings over a vehicle’s lifecycle. Reduced maintenance needs and increased fleet utilisation further enhance profitability for fleet operators, making the switch to modern vehicles a smart business decision.
Championing Circular Economy
The scrappage policy aligns seamlessly with the principles of a circular economy, which focuses on minimising waste and maximising resource reuse. Scrapped vehicles yield recyclable materials like steel, aluminium, plastic, and glass. Estimates suggest that recycling these materials can reduce raw material costs by up to 5%.
With raw material prices rising globally, the policy not only fosters sustainability but also offers economic advantages by reducing reliance on imports and supporting resource-efficient manufacturing practices.
Incentivising The Initiative
To encourage vehicle owners to participate, the Delhi government has introduced a tax rebate scheme tied to scrapping certificates. Owners of diesel commercial vehicles are eligible for a 15% discount on registration fees when they scrap their old vehicles at government-authorised Registered Vehicle Scrapping Facilities (RVSFs). Such incentives are vital in driving large-scale adoption of the policy.
Challenges Ahead
Despite its transformative potential, the scrappage policy faces hurdles. India currently has only 65 operational vehicle scrapping centres, with an additional 57 approved but not yet functional. The limited number of Automated Testing Centres (ATCs) adds to the challenge. Of the 81 ATCs in operation, 24 are in Gujarat, leaving most States underserved. While 184 ATCs are under construction, a significant infrastructure expansion is needed to realize the policy’s full benefits.
Overcoming these challenges requires collaboration between industry stakeholders and policymakers. Building the necessary infrastructure and raising awareness among fleet operators are essential steps to ensure the policy’s success, he explains.
Driving Sustainable Future
At DICV, the scrappage policy represents more than just regulation—it’s a transformative opportunity. BharatBenz trucks and buses, equipped with advanced safety and emissions technologies, exemplify its commitment to innovation and sustainability. By modernising fleets and reducing environmental impact, the company is not just meeting today’s needs but shaping the future of mobility in India and beyond, he says.
The Vehicle Scrappage Policy is a bold step toward a safer, greener, and more sustainable India. By retiring outdated vehicles and embracing modern alternatives, India is not just driving progress—it’s leading the way to a brighter future, he reiterates.
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ICRA Sees Significant Vehicle Scrappage Potential Amid Implementation Challenges