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By 2025 India will have 22 million obsolete vehicles. Where will they go to die?

A strong economic growth has meant new vehicles are added to the street every month, but there is no policy on scrappage of obsolete vehicles.
Acknowledged the world over for producing best in class yet affordable automobiles, the Indian automobile industry also makes up half of the nation's manufacturing GDP. However, the rapid strides of the industry is also causing considerable headache for the nation.

The auto industry is considered as one of the largest polluters across the globe and there has always been considerable pressure on the sector to clean up. In India, the auto manufacturers, including numerous OEMs (Original equipment manufacturers) operating in the sector, do boast of a competitive positioning when it comes to leveraging on the increasingly popular idea of green manufacturing. The shift to BS IV in April 2020 and its acceptance by the sector is seen as largely positive.

However, given the country's sheer size and expanse, several variations, types of technology employed, there is a gap in understanding among different players in the sector on the rationale behind a sustainability-led approach and what constitutes it.

The Human factor
The Indian auto and its component industry that manufactures a wide variety of products including engine parts, drive transmission and steering parts, body and chassis, equipment and electrical parts, etc, is considered to be the well-developed. “When it comes to auto components industry, we are a $57 billion industry, creating about 50 lakh jobs, so in that sense, we are a significant economic wealth creator and employment generator,” maintains Vinnie Mehta of Automotive Component Manufacturers Association of India (ACMA). Among this section, a significant size of the blue-collar workforce is employed in the unorganized sector.

“The Indian auto industry intends to create nearly 65 million additional jobs by 2026, around 32 million people are employed directly and indirectly by the sector, out of which at least 65% are contract workforce,” says Munira Loliwala, Business Head – EMPI, TeamLease Services. Loliwala adds that this specific segment has a faster growth rate and higher labour elasticity too.

“The backbone of the auto industry is its blue-collar category. Due to its emergence and existence as an unorganised belt, it has not scaled sufficiently. Lack of skills related to drawings and projects, gaps in programming skills, insufficient interpersonal growth and inadequate training facility within the component industry remains a challenge,” she contends.

Experts opine, considering the sheer size of the informal workforce involved in auto manufacturing, the sector is prone to lots of workforce-related malpractices too. Blue-collar workers such as fitters, welders and electricians, etc, play a critical role in shaping this segment’s end-product offerings, yet they remain the most neglected workforce in the industry. Hired generally as contract workers, this section typically receives a salary that’s just around the minimum wage levels fixed by the government, say industry experts, who further hold that even if such workers’ total earnings [with overtime and incentives included] are taken into account, their total take-home pay, considering the revenue automakers generate on the back of their toil at assembly lines, will still be considered a pittance.

The issue with ELVs
Perhaps, one of the biggest issues, but least talked about is to figure out what to do with the old vehicles. A strong economic growth has meant new vehicles are added to the street every month, but there is no policy on scrappage of obsolete vehicles.

By 2025, there could be 22 million obsolete vehicles (called ELVs- end-of-life vehicles) in India, which would require recycling, says a study by the Central Pollution Control Board (CPCB) and others. The same study notes that about 25% of the waste material coming from an ELV poses a potential environmental threat, due to the presence of heavy metals, waste oils, coolants, ozone-depleting substances, etc.

Traditionally, such vehicles [used to] end up in scrap yards where these are disposed of in a crude and unscientific way, thereby seriously jeopardizing India’s efforts towards embracing Sustainable Development Goals (SDGs) as mandated by the United Nations.

Vishnu Mathur, DG, the Society of Indian Automobile Manufacturers (SIAM), an apex national body representing vehicle manufacturers in India, holds that the auto players in the organized auto domain have now started acknowledging the danger in leaving this issue unaddressed. “Auto OEMs are now taking the lead in establishing organised vehicle scrapping centres to scrap ELVs in an environmentally friendly manner, unlike the un-regulated manner carried out by unorganised roadside operators,” he says.

Disparity in awareness levels
While major industry players such as Maruti, Mahindra & Mahindra Ltd etc, do possess [and make use of] a great deal of awareness pertaining to the latest globally followed best practices, benchmarks and standards concerning green manufacturing, there does exist a disparity in the level of awareness and associated skillsets among the automobile players across the country.

On the one end of the spectrum, the established brands make it amply clear that auto companies are now gradually relying on renewable sources of energy for their production process and their main focus is on saving energy, water and reduce hazardous waste generation & CO2 emissions. On the other, a cursory look across various tier 2-3 based auto OEM players reveal that there still is a long way to go in having a nationwide uniformity across players in terms of these very practices.

Explaining the anomaly, Vinnie Mehta, Director General, Automotive Component Manufacturers Association of India (ACMA) asserts, “The automotive value chain is very long and the sector essentially works in tiers. We like to believe that our scorecard is still a bit mixed when it comes to adopting globally followed best practices in sustainability, but having said that, a lot of effort has been made and is being made in this direction. However, when it comes to smaller companies, it still is a challenge.”
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