The Ministry of Road Transport and Highways, Nitin Gadkari has recently submitted the vehicle policy to the Finance Ministry to seek approval for scrapping nearly 28 million over 11 years old polluting vehicles in the country.
Road Transport and Highways Minister, Mr Gadkari stated to media,“I have submitted the vehicle scrapping policy to the Finance Minister and we will take it to the Cabinet, once it is approved.”
The proposed ‘Voluntary Vehicle Fleet Modernisation Plan (V-VMP)’ provides incentives worth 8-12% of the cost of a new vehicle in lieu of surrendering the old ones.
The advantages under the proposed V-VMP policy 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 V-VMP will be applicable to the vehicles bought on or before 31 Mar’05.
Under this scheme, people surrendering their old vehicles and buying new one will receive three advantages amounting to 8-12% of total cost of the new vehicle, said the Ministry.
In order to ensure 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 Apr’17.
With this draft policy, sales of automobile makers are likely to boost up, resulting to higher production capacity utilisation. Also, they should support the government in this initiative financially by offering special discount to customers buying vehicles under this scheme, added Mr Gadkari.
Gadkari had earlier said that the policy will increase automobile industry turnover over four-times to INR 20 lakh crore in the next 5 years.
Subject to approval from the Ministry of Finance, it has been proposed that vehicles bought under this scheme may get upto 50% excise duty relief based on old vehicle and replacement vehicle category.
In addition, SRTU (state road transport undertaking) buses may be given complete excise exemption to ensure higher participation and modernize state’s bus fleet.
Potential market in India
India is a very potential market for auto recycling looking at the rising number of vehicles that are being sold every year. India will become world’s third largest automobile market in couple of years. This will also bring lot of opportunities for auto recycling in India.
Globally, over 30 million vehicles are recycled every year generating a scrap of about 25 million tones. According to a report by Central pollution board, there will be over 8 million vehicles that can be recycled in the very first year.