Delhi: Cash crunch, pollution find an echo in scrap markets

Currently, the Delhi government issues ‘no objection certificates’ (NoCs) to vehicles older than 10 years but not older than 15 years.

Written by Sarah Hafeez | New Delhi | Published:November 14, 2016 3:01 am
carscrap759 Mayapuri scrap market (Express Photo: Abhinav Saha)

The Mayapuri scrap market, said to be Asia’s largest, is unusually quiet for a weekday. Vehicle shells, engines, steering wheels, tyres and metal innards ripped out of vehicles lie stacked on either side of the alleyways of the west Delhi market. In a corner, shop owners and scrap dealers stand in a circle, discussing demonetisation.

“The market is closed, we are earning no money. No one is coming with their cars or machines because all our transactions are in cash,” says Sanjog Singh, a scrap dealer.

The number of vehicles coming in to get “cut”, dealers say, had gone up by roughly 25-30 per cent over the last six months.

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“We scrap around 300 vehicles a day in Mayapuri. Since the court orders earlier this year, we have seen a spurt in vehicles older than 15 years. Customers prefer getting vehicles scrapped in exchange for about Rs 15,000 or their trucks for Rs 40,000. They say they know the vehicle is going to be pulled off the roads by authorities sooner or later,” says Sanmeet Singh, a scrap unit owner.

Mayapuri dealers say much of their business, however, has been hit by informal scrap markets which have cropped up over the last few years. While the NGT’s July order to scrap diesel vehicles older than 10 years — prompted by rising pollution in the capital — has benefited the market, farmers and car owners aren’t too pleased.

Industry experts and bodies such as Society Of Indian Automobile Manufacturers (SIAM) suggest that a voluntary cash-for-clunkers scheme, based on incentivising disposal of old polluting vehicles, is a more effective policy decision. Introduced in several countries to boost sales of new cars during the slump of 2009, experts say cash-for-clunkers programmes can be tried in the country. “We recommend a voluntary policy because it has been hugely popular in the West. It gives a boost to the scrap industry as well,” says SIAM director Vishnu Mathur.

The Ministry of Road, Transport and Highways has been mulling over a similar proposal — discard old vehicles and earn up to Rs 1.5 lakh. The ministry had said last year that it sent a proposal to the Union Cabinet for approval. The UPA government in 2013 also planned to bring in such a proposal.

But governments have not yet set up a robust and organised mechanism for exclusively scrapping old vehicles. In fact, government-auctioned vehicles through the MSTC also come for scrapping at Mayapuri.

In April last year, Union Minister Nitin Gadkari emphasised on the importance of “a planned scrappage system” for vehicles. “We are trying to create a zone, where the scrapping and processing of vehicles can be done. These may come up at ports on the outskirts of Chennai,” he had said.

Those who don’t opt for scrapping, sell their vehicles in neighbouring states such as Rajasthan or Uttar Pradesh, where a policy against old vehicles has not been determined or enforced.The second-hand car market in Karol Bagh has seen the sale of vehicles older than 10 years go up by roughly 10 per cent in the past few months, say dealers.

Harpal Singh, owner of a large, used car purchase and sale unit in Karol Bagh, says, “Someone who bought his vehicle for Rs 8 lakh and has maintained it well will never want to sell his vehicle 10 or 15 years down the line for Rs 15,000 in a scrap market. Heavy goods vehicles, which people purchased for Rs 4 lakh 15 years ago, can fetch around Rs 40,000 in the scrap market. People have a sentimental attachment with their vehicles. They prefer selling it in the second-hand market so it can be used further, and they get a good price in return. People with cars that are 13-14 years old know their cars would be pulled off the roads.”

“The government should put in place a system of inspection to see if a vehicle is roadworthy instead of putting a blanket ban based on the age of a vehicle. A vehicle can be old but very fit for the road,” says Singh.

Currently, the Delhi government issues ‘no objection certificates’ (NoCs) to vehicles older than 10 years but not older than 15 years. The NoCs allow sale of cars 200 km beyond the periphery of Delhi. In the absence of a robust scrappage system, that’s where many old car owners are heading.