The Flagship Of Hinduja Group, Ashok Leyland CEO Proposes Innovative Hybrid Approach

The Flagship Of Hinduja Group, Ashok Leyland CEO Proposes Innovative Hybrid Approach To Scrappage Policy

The Chief Executive of Ashok Leyland has advocated for a hybrid approach to the upcoming scrappage policy, emphasizing its potential to enhance effectiveness while ensuring compliance with environmental standards. This innovative strategy aims to balance the retirement of vehicles with the need to retain trucks that adhere to stringent emission regulations, fostering a sustainable and eco-friendly transport sector.

Recent reports indicate that the central government is considering revisions to the policy, shifting the focus from an age-based mandate to one linked to tailpipe emissions. Shenu Agarwal, MD & CEO of Ashok Leyland, supports this shift, stating, ”If a truck meets the necessary emissions and safety standards, there would be no need for scrapping. However, if it fails, appropriate measures should be taken to remove it from service. We support this approach as it ensures that vehicles comply with environmental regulations.”

When asked about the potential effects of this shift on new truck sales, Agarwal acknowledged it could impact the market but highlighted the challenge of establishing a robust testing infrastructure. A hybrid approach would allow the government to set an age limit for trucks while requiring inspections before reaching that threshold. This dual strategy ensures that older trucks are both safe and environmentally compliant while encouraging the replacement of those that fall short of necessary standards.

The Voluntary Vehicle Fleet Modernization Programme, known as the Scrappage Policy, was introduced in India in March 2021 and is being implemented in phases starting from April 1, 2023. The initial phase mandates the scrapping of government vehicles older than 15 years, affecting over 900,000 such vehicles. However, as of August 31, 2024, only around 41,432 government vehicles have been scrapped under this policy, according to rating agency Icra.

As the second phase of the policy shifts focus from age to vehicle fitness, it becomes more voluntary. Beginning October 1, 2024, heavy commercial vehicles (HCVs) over 15 years old and other vehicles older than 20 years must pass a mandatory fitness test, with those failing the test required to be scrapped.

ICRA estimates that as of March 31, 2024, there are approximately 1.1 million medium and heavy commercial vehicles (M&HCVs) over 15 years old, representing a significant opportunity for scrappage. Although actual scrappage rates may be lower than expected due to typical usage patterns, a portion of these older vehicles could be scrapped, alongside the mandatory scrapping of government vehicles, stimulating vehicle sales through replacement demand.

Mr. Prakash Hinduja, Chairman of the Hinduja Group, Europe, noted, “A progressive scrappage policy that prioritizes emissions compliance is a step forward for the automotive industry. It not only encourages the modernization of the fleet but also contributes to a cleaner environment. We must embrace this opportunity to innovate and lead the way toward a more sustainable future.”

While the potential for scrappage in segments such as two-wheelers, passenger vehicles, and light commercial vehicles (LCVs) remains limited due to their shorter usage spans, the industry is optimistic about the positive outcomes of the revised scrappage policy.