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NEW DELHI: The new vehicle scrappage policy announced by the Union government will have a positive impact on Gujarat's economy since the state has a thriving ship breaking industry and also a high level of vehicle ownership, which will help create an enabling ecosystem for vehicle scrapping, according a report published by Deloitte.

As per the report, Gujarat has one of the highest vehicle ownership rates in the country, with around 450 vehicles for every 1,000 people. The number of registered vehicles over 15 years old is estimated at over 50 lakh only in Gujarat, Rajasthan, and Maharashtra, thereby ensuring a minimum scale of operations for vehicle scrapping units

“Given the state’s access to ports along the western coast, opportunities exist in targeting the import market for old vehicles, as in the case of ship breaking," the report said.

It said Gujarat is home to one of the greenest and safest ship breaking hubs at Alang, which possesses international standards green certification.

“These yards already employ over 100,000 people with an existing common effluent treatment plant, landfill site for hazardous waste, environmental monitoring system and an ecosystem of downstream units. These can optimise additional investments to set up integrated vehicle scrapping facilities as well as RVSFs," the report added.

According to the new policy, commercial vehicles of more than 15 years and passenger vehicles more than 20 years old will have to be mandatorily scrapped if they don’t pass fitness and emission tests. Government departments will also have to let go of their vehicles after use for fifteen years.

Customers and fleet owners will have to get their vehicles tested after a certain period to ascertain their fitness depending on tailpipe emission and other parameters.

Automobile manufacturing companies operating from Gujarat will be able to benefit from the vehicle scrappage ecosystem. Recycled components can be readily used by manufacturers like Suzuki Motor Gujarat, Ford Motor India, Honda Motorcycle and Scooters India, Tata Motors Ltd and MG Motor India Ltd.

“The state also features within the top 3–4 states in the country in vehicle manufacturing capacity. It has established auto manufacturing hubs in various locations. Consequently, there already exists a ready market for the recycled material and components from vehicle scrapping centres, as well as a potential investor base for setting up large-scale vehicle scrapping centres, as automobile companies may also be interested in investing in vehicle scrapping facilities," the report noted.

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