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20-year old vehicles could soon be dead as India vehicle scrap policy to head for cabinet approval

India's new vehicle scrap policy was given 'in-principle' approval at a high-level inter-ministerial meeting at the PMO to pave way for removing of 20 years old commercial vehicles (CVs) from April 1, 2020.

By: | Updated: March 26, 2018 12:47 PM
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The long-pending vehicle scrap policy in India is on the verge of implementation as the Union Minister, Nitin Gadkari confirms that the new policy will head for cabinet approval in less than a month. He also says that this 20-year old vehicle scrap policy will see an additional flow of Rs 10,000 crore into government coffers. India's new vehicle scrap policy was given 'in-principle' approval at a high-level inter-ministerial meeting at the PMO to pave way for removing of 20 years old commercial vehicles (CVs) from April 1, 2020.

2.8 Crore cars bought before March 2005 could be trashed as scrappage policy approved by Finance Ministry

"Old commercial vehicles are responsible for 65 per cent of the vehicular pollution. The policy to scrap these has got nod at a Secretary-level meeting at the PMO. Now stakeholders consultation will be done in a fortnight and it will go to the Cabinet in about a month's time" said Nitin Gadkari, Minister of Road Transport, Highways and Shipping to PTI in an interview.

Post cabinet's approval, this draft policy will head for a nod from GST Council as the concessions that "we are liable to give to buyers of new vehicles in lieu of the scrapped ones" is linked to state governments and the Government of India, the minister said. The GST Council will decide the amount of concession that the Centre and the states will offer in this regard. "I am not in a position to say the exact benefits to the buyer of such vehicle at this moment" but assess that the benefit of buying one in place of scrapped one could be anything ranging between 15 to 20 per cent, he said.

"The policy once it comes into force will result in an increase in Rs 10,000 crore revenue to the government and is also expected to boost the production of new vehicles by 22 per cent.The automobile industry at present is a Rs 4.5 lakh crore industry in India, will swell to a Rs 20 lakh crore industry," the minister claimed.

Vehicle scrap policy gets go ahead at PMO meet; over 20 year old commercial vehicles to face axe

Earlier, an official requesting anonymity had said that the GST Council will be requested to reduce rate to 18 percent from 28 per cent for a new commercial vehicle that would be purchased in place of a scrapped vehicle. Gadkari said once the policy comes into force, various vehicle scrapping centers would be set by the Centre as well as states to scrap vehicles and various clusters would be set up near ports like Kandla under ambitious Rs 12 lakh crore Sagarmala initiative.

"Such automobile clusters will be designed to not only scrap commercial vehicles from the country but India could be a hub for global vehicle scrap, these clusters will recycle separately various vehicle components like steel, aluminium, copper, plastic etc and automobile part prices are bound to come down by 30 to 40 per cent," he said.

If the automobile parts will be cheaper than India could produce automobiles at a very competitive rate, Gadkari said and added that India already is manufacturing major global brands. He said automobile industry which is of the size of Rs 4.5 lakh crore exports components and vehicles worth Rs 1.45 lakh crore which was bound to swell significantly while there will be a boost to "Made in India" and "Make in India" drive of the Prime Minister Narendra Modi.

Asked why was it decided to increase the life of vehicles to be scrapped from earlier 15 years to present proposed 20 years, the minister said the decision was taken to protect the interest of people who would have taken loans to buy commercial vehicles. In May 2016, the government had floated a draft Voluntary Vehicle Fleet Modernisation Programme (V-VMP) that proposed to take 28 million decade-old vehicles off the road.

A committee of secretaries (CoC) after discussing it recommended to the Road Transport and Highways Ministry for redesigning the scheme for greater participation of states with partial support from the Centre. The CoS has suggested that the "scheme may dovetail a calibrated and phased regulatory approach for capping the life of vehicles together with stricter implementation of emission norms and accordingly a revised consultation paper got in principle nod at PMO," an official said.

Asked whether the government will in future reduce the lifespan for the scrapping of such vehicles, the minister said any such decision will be taken based on the results of the current policy. The minister said several initiatives are on to make India a hub for global recycling including increase in the draft at ports to 18 metres to ensure vessels up to 2 lakh tonnes. This in turn will save transportation cost, he said. He said good technology, coupled with environment-friendly transport and other factors will boost economic growth in the country and create employment.

He said the proposed policy will be a major milestone in reducing vehicular pollution which has been the focus of his ministry which has already mandated mass emission standards for BS VI throughout the country with effect from April 1, 2020. Notifications have also been issued for alternative fuels such as biodiesel, bioethanol, bio CNG, flex fuel ethanol and flex-fuel methanol in addition to the retro fitment of hybrid electric vehicles to reduce vehicular pollution, he added.

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