Discard your old vehicles and earn up to Rs 1.5 lakh. That is the punchline of a proposal that the Ministry of Road, Transport and Highways (MoRTH) is preparing to send to the Union Cabinet for approval to incentivise consumers to discard old vehicles.The ministry, which has mandated global consultancy firm McKinsey to outline the broad contours of the scheme, will soon approach the Finance Ministry to provide incentives to vehicles owners to “surrender” old, polluting vehicles to recycling agencies.According to the proposal, those vehicles in working condition can be retro-fitted with li-ion batteries and resold in the market — alternately, automotive scrap may be recycled for industrial use.
MSTC and JSW Group, official sources confirmed, have already conducted initial discussions on this issue and have expressed interest in setting up vehicle recycling units.
Union Minister for Road, Transport & Highways Nitin Gadkari said, “McKinsey is doing the research for us on a cash-for-clunkers scheme. We are looking at a proposal wherein if you sell your old vehicle you will get a certificate. When this is produced at the time of a new purchase, you will get a discount of up Rs 30,000-50,000 on passengers vehicles.”
Together with tax exemptions, the total benefits for big vehicles, such as trucks, will be up to Rs 1.5 lakh.
Gadkari’s proposal comes at a time when most cities in India find a place on the list of the most polluted urban habitations in the world. Vehicular pollution in Delhi has reached record levels, with respirable suspended particulate matter at 316 micrograms per cubic metre, 16 times above normal — the National Green Tribunal has banned 10-year old diesel vehicles from plying in the national capital.
“The issue of pollution is serious and has to be addressed. What the minister wants is to provide incentives to vehicle owners to discard old, polluting vehicles and then retro-fit them with batteries. The consumer will get a certificate of a specified amount at the time of sale to the recycling agency. This can be traded for a discount at the time of purchasing a new vehicles. We are also considering a scheme through which buyers will receive some kickback in terms of fiscal incentives if he purchases retro-fitted electric vehicles from the market consequently,” said a senior government source.
These retro-fitted vehicles may be sold to fleet owners for eco-friendly taxis, the source added.
Gadkari has already held a round of consultations with the Finance Ministry and the Environment Ministry on the proposal.
The plan is to set up eight-10 industrial units near ports like Kandla which will give certificates for accepting old vehicles and recycle vehicles from India and abroad, thus giving a boost to employment and economy.
“The ship breaking industry near Kandla already recycles 200,000 tonnes of scrap. If the same can be done for auto parts, it will create huge employment opportunities,” Gadkari said.
MSTC officials did not respond to messages from The Indian Express seeking comment while JSW Group officials were unavailable.
On August 9, The Indian Express had reported on Gadkari’s mandate for the Indian Space Research Organisation (ISRO) to develop the prototype of a battery than can be retro-fitted into old diesel vehicles for delivering motive power.
In 2013, the UPA had mulled a version of the cash-for-clunkers programme to replace 15-year old commercial vehicles and revive the country’s manufacturing sector.
The Department of Industrial Policy & Promotion (DIPP) had explored the idea of setting aside a corpus of Rs 1000 crore and providing Rs 1 lakh directly to manufacturers to subsidise every exchange of old commercial vehicle for a new one.
Variations of the cash for clunkers programme have been rolled out in the past by the governments of the US, Japan, and Europe. Most such schemes operate for a limited period, and are aimed to boost sales of newer, more fuel efficient cars.
Sugato Sen, deputy director genera, Society of Indian Automobile Manufacturers (SIAM), said, “We have not done a study to gauge how many vehicles in India are aged over 10 years. However, any proposal to incentivise scrapping of old vehicles will not only help in spurring sales but also mitigate fuel consumption and reduce pollution.”
In 2013, SIAM had made a presentation before the Parliamentary Standing Committee on Industry headed by JD(U) MP K C Tyagi. The industry body had pushed for concessions of up to Rs 1 lakh in taxes if consumers sold vehicles older than 15 years.
The first stage of the scheme was planned to cover the country’s eight largest cities, and would have see as many as 8.9 million passenger vehicles and 1.47 million commercial vehicles being scrapped.