The Bloom of Multi –Billion Dollar Business on Scrap Metals
On scrapping 50 Lakh LMVs that are aged beyond 20 years generate 4 Billion tons of steel scrap, 765 Million tons aluminum scrap, 112 Million copper scrap and 10 Million rubber and plastic scrap. And, scrapping 34 Lakh LMVs that are aged beyond 15 years generate 3 Billion tons steel scrap, 510 Million tons of Aluminum scrap, 74 Million tons of Copper scrap. This is the gigantic figure arrived on calculating the scraps only of LMVs that are pronounced to be scrapped. On speaking to a guy from a scrap yard he said that the weight of light motor vehicle would be 1 – 2 ton depending on the year of make and that of HMVs could be up to 9 tons. Imagine the proportion of metal scraps that can give rise to 17 Lakh HMVs. Ever given a thought to invest on scrap metals? Then, this might be the lucky time!
On the budget meeting that was held on February 2021, the Finance Minister Nirmala Seetharaman gave out that , “ the government will announce a voluntary vehicle scrappage policy to phase out old and unfit vehicles”. Following this, the Union Road Transport Minister Nitin Gadkari has launched vehicle scrappage policy.
The main aim of this policy being the reduction in air pollution and increasing road safety, it further adds upon providing jobs for 50,000 employees and cutting down costs in oil imports due to high fuel efficiency.
Sneak Peek on Tentatives:
- April 1, 2022 Fitness for PSU vehicles.
- April 1, 2023 Fitness for HCV vehicles.
- June 1, 2024 Fitness test rules for other categories.
- October 1, 2021 Release of rules for fitness scrapping centers.
Which Vehicles are Apt for the Scrappage Policy?
- All the government vehicles of the Central and the State government that are over 15years from their date of registration will be shredded.
- The personal cars that are aged 15 years from their registration will have to undergo a fitness test.
- The transport vehicles that are used for commerce will also have to undergo a fitness test if they are 15 years old.
- The Vintage cars which are way older on road get exemption from this policy for the reason that they produce very less pollution. The ones that use fuels like CNG, ethanol and LPG , agricultural equipment also get their exemption.
High Points to Call Attention to the Policy on Scrap Metals
• Government announced various incentives on scrapping old vehicles and buying new ones like 5% discount by manufacturers, no registration fee, scrap value equal to 4% - 6% etc.,
• Moreover this could be a huge profit for recycling business in India as the estimated LMV’s are 51 lakh over 21 years, 34 lakh over 15 years and medium, heavy and commercial over 15 years are 17 lakh that are to be scrapped.
• Since there will be availability of raw materials from the scrapped materials which can be used in the making of automobile parts, reduces the cost upto 40%.
• The export component is expected to hit a hike of 3lakh crore from 1.45lakh crore.
Let’s Speak on Scrapping of Vehicles
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When a vehicle is scrapped there are both ferrous and non – ferrous particles that are available in the shreds. On an average a car is made of 900Kg of Steel, 150Kg of Aluminium, 22Kg of Copper( it tends to differ with the type of car), the other components used are battery, rubber, plastics and windshield of which 65 – 70% steel scrap, 7% - 8% aluminium scrap, 1% - 1.5% copper scrap and 15% - 20% plastic and rubber scrap are obtained when scrapped.
India’s Import of Scrap Metals
• Steel being the important raw material in car making industry, India imported 7.09 billion tons of steel scrap in 2019.
• Though India is the largest producer of aluminium, it’s increase in demand caused 327% surge in the import of aluminium scrap in the FY 20.
• 210 thousand metric tons of copper scrap came into India in the FY 2018 – 2019.
The Policy : A Cost Cutter in Imports of Metal Scraps
The current Steel Scrap metal price in US per pound is $0.5. The current metal steel scrap in India is Rs.68.5/kg. On scrapping a car the amount of steel obtained is 950Kg. Since there are 50 lakh LMV to be scrapped, this must meet the requirement of steel industry and decrease the import bill on steel scrap. The current Aluminium Scrap metal price in US is $1.1734/Lb and in India the metal's Scrap price is Rs 1.10lakh/ton. Copper Scrap metal in US is priced as US $4.2876/Lb, and copper scrap metal in India is priced as Rs. 728/Kg. The scrappage policy would make India self – sufficient meeting the huge demands on metal scraps.
The Scrappage Policy is a Huge Venture to the Automobile and Recycling industries
The automobile industry in India went through a condition of, “Out of Demand’ and suffered even more due to the pandemic during which the policy was announced and this is going to be a real boon for the automobile and recycling industries.
What would have been the outlook of the automobile and recycling industry heads do you think? Well, they would have been “as happy as Larry” wouldn’t they? Of course! Indian auto industry is expected to make a turn over of 10lakh crore within few years from the current one of 4.5lakh crore. Isn’t that a big news?!.
The scrappage Policy of vehicles had created a demand of new fuel efficient, pollution less vehicles that would contribute in reducing air pollution. “The new policy presents a huge business opportunity for original equipment manufacturers (OEMs) and significantly reduce pollution while bolstering road safety” was the happy note told by Venkatram Mamillapalle , country CEO and MD, Renault India Operations.
After all damage that had been done to the mother nature , this policy expects pollution less and efficient fuels to replace the older ones. This also paves the way for recycling business to take a turn over in India. On comparing the current scrap metal price in India, US and other countries and watching the datas on vehicles marked to be scrapped in India this would be the greatest opportunity for recycling business. ‘ Let’s dream for a greener India’.