Vehicle policy to generate steel scrap worth Rs 11,000 crore per annum

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New Delhi | June 5, 2016 10:34 AM

Government's proposed policy to push 28 million decade-old polluting vehicles off the road would generate steel scrap worth Rs 11,500 crore annually, reducing import burden.

Vehicle policy, Delhi pollution, air pollution, Voluntary Vehicle Fleet Modernisation Programme (V-VMP), Medium and Heavy commercial vehiclesThe proposed policy, for which the government has invited comments and views from stakeholders, has been designed to minimise air pollution caused by vehicles. (Reuters)

Government’s proposed policy to push 28 million decade-old polluting vehicles off the road would generate steel scrap worth Rs 11,500 crore annually, reducing import burden.

The government is eyeing a huge quantity of steel scrap from its proposed Voluntary Vehicle Fleet Modernisation Programme (V-VMP) that offers incentives worth 8-12 per cent of the cost of a new vehicle for surrendering the old one.

“In addition to environmental and energy efficiency benefits, the V-VMP would be able to generate steel scrap worth Rs 11,500 crore domestically every year with the set-up of organised shredding centres of which 50 per cent would be generated by MHCVs (buses and trucks),” the government has said in its proposed policy.

This will help reduce India’s import burden and improve the foreign-exchange reserves, it said.

The proposed policy, for which the government has invited comments and views from stakeholders, has been designed to minimise air pollution caused by vehicles.

Analysis of segment and age of vehicles causing air pollution has shown that MHCVs (Medium & Heavy Commercial Vehicles) constitute just 2.5 per cent of the total fleet but contribute to 60 per cent of pollution.

Besides, the older vehicles, typically more than 10 years of age and pre-BS I compliant, constitute 15 per cent of the total fleet but pollute 10-12 times more than a new vehicle because of drastic change in pollution norms, the government has said.

In light of these two trends, it’s proposed to run a targeted vehicle modernisation programme to curb environmental pollution in the country.

“Implementation of the scheme for trucks and buses would result in 17 per cent reduction in CO emissions, 18 per cent reduction in HC+NOx emissions and 24 per cent reduction in PM emissions,” the government said.

State Road Transport Undertakings (SRTUs) buses may be given complete excise exemption to ensure higher participation and modernisation of their fleet.

Last month, the government announced the draft of the policy under which sops will come in three forms — scrap value from the old vehicle, a special discount by the automobile manufacturer and a partial excise duty exemption.

The Ministry of Road Transport and Highways said the V-VMP will be applicable on the vehicles bought on or before March 31, 2005.

“The total potential vehicles to be replaced with this definition are nearly 28 million,” it has said.

Under the scheme, people surrendering their old vehicles and buying new ones are likely to receive three benefits amounting to 8-12 per cent of total cost of the new vehicle, the ministry said.

“To ensure that the resultant impact is beneficial to the environment, the replacement vehicle needs to be BS-IV compliant, which is going to be rolled out nation-wide by April 2017,” the draft policy said.

Also, the policy would boost sales of automobile manufacturers leading to higher production capacity utilisation and the automobile manufacturers would support the government in this initiative “financially by giving special discounts to customers buying vehicles under this scheme”.

According to Road Transport and Highways Minister Nitin Gadkari, the policy will boost automobile industry turnover over four-times to Rs 20 lakh crore in the next five years.

Subject to approval from Ministry of Finance, it has been proposed that vehicles bought under this scheme may get up to 50 per cent excise duty relief based on old vehicle and replacement vehicle category.

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