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News: As per media sources, government is mulling a proposal to mandate domestic auto OEMs to use 10% of metal used in vehicles sold 20 years ago (end of life vehicles at this point in time) in the present production process. This share will progressively increase to 20% and eventually 30% as scrapping ecosystem gains pace in the country.
Views: This measure shall promote OEM’s set up scrapping centres or tie-up with credible names and shall promote circular economy. It falls under the category of Extended Producers Responsibility (EPR) which is currently being enforced by other sectors such as tyres. Financial impact of the same is difficult to ascertain at this point in time, however this coupled with discounts on new vehicle purchase against the scrapped vehicles, will eventually make vehicle scrappage a reality and shall benefit the industry in the long run (in terms of new vehicle sales).
Impact: Neutral