Benefits on buying new vehicles on scrapping of old ones; taxes, other levies for polluting cars: Union Minister Nitin Gadkari

Buyers of new vehicles after opting for scrapping of their old and polluting vehicles will be offered benefits under the new policy to phase out old and polluting vehicles, Union minister Nitin Gadkari has said.

Terming the policy a boon, the road transport minister said it would lead to a 30 per cent boost to the Indian automobile industry turnover to Rs 10 lakh crore in the years to come.

The voluntary vehicle scrapping policy announced in the Union Budget for 2021-22 is touted as a major step to boost the Indian automobile sector, reeling under the adverse impact of the Covid-19 pandemic.

Under the voluntary vehicle scrapping policy, personal vehicles would undergo fitness test after 20 years while commercial vehicles would require it after completion of 15 years.

"Those going for scrapping of their vehicles will get some benefits from the manufacturers. In fact, scrapping policy will prove to be a boon... not only it will boost economy, benefit automobile sector but also check vehicular pollution," Gadkari, who also holds MSME portfolio, told PTI.

The minister said very soon the finer details of the policy will be unveiled by him and exuded confidence that the automobile industry will turn into one such sector that will offer maximum number of employments in the days to come.

Asked about disincentives for old and polluting vehicles not opting for scrapping since it will be a voluntary, the minister said there are provisions of green taxes, other levies and such vehicles will have to undergo strict fitness tests in automated facilities.

Secretary, Road Transport and Highways, Giridhar Aramane said incentives are worked out under the policy with discussions with stakeholders.

Asserting that scrapping has huge advantages, he said research has pointed out that an old four-seater Sedan will result in losses of Rs 1.8 lakh in five years while for a heavy vehicle it comes to Rs 8 lakh for a period of three years.

"We want to give some incentives," he said and added that the policy is mandatory, all vehicles will be required for automated fitness tests done without any human intervention, corruption or fudging of data.

He said automated fitness tests will be set up under PPP mode while for scrapping centres also private partners and state governments will be assisted.

"Structure and framework of scrapping policy is under work and green tax has already been notified. Many states have notified in ineffective way ....We want to advise the state governments through notification under Motor Vehicles Act to consider imposing green tax on older vehicles which cause more pollution," Aramane said.

Driving such vehicles that fail to pass automated tests will attract huge penalties and also be impounded.

Talking about the policy, Gadkari said: "This policy will boost buying of new vehicles besides generating huge employment. Automobile industry turnover which is 4.5 lakh crore at present is likely to swell to Rs 10 lakh crore in years to come with India becoming an automobile hub," the minister said.

The export component of this which at present is 1.45 lakh crore will go up to Rs 3 lakh crore, he said and added that once the policy comes to practice availability of scrapped material like steel, plastic, rubber, aluminium etc will be used in manufacturing of automobile parts which in turn will reduce their cost by 30 to 40 per cent.

He said the policy will give a boost to new technologies with better mileage of vehicles besides promoting green fuel and electricity and cut on India's huge Rs 10 lakh crore crude import bills.

"One crore vehicles will go for scrap," he said.

Presenting the Budget for 2021-22 in Parliament, Finance Minister Nirmala Sitharaman on February 1 had said that details of the scheme will be separately shared by the ministry.

Gadkari had said the policy will lead to new investments of around Rs 10,000 crore and create as many as 50,000 jobs.

"The policy would cover an estimated 51 lakh Light Motor Vehicles (LMVs) that are above 20 years of age, while another 34 lakh LMVs are above 15 years. It would also cover 17 lakh medium and heavy motor vehicles, which are above 15 years, and currently without valid fitness certificates," Gadkari said.

These vehicles are estimated to cause 10-12 times more pollution than the latest vehicles, he said.

Last month, the government had said it plans to impose green tax on old polluting vehicles soon in a bid to protect environment and curb pollution while vehicles like strong hybrids, electric vehicles and those running on alternate fuels like CNG, ethanol and LPG will be exempted. The revenue collected through the green tax will be utilised for tackling pollution.

Under the scheme, transport vehicles older than eight years could be charged green tax at the time of renewal of fitness certificate at the rate of 10 to 25 per cent of road tax, as per green tax proposal sent to states for consultations after cleared by the ministry.

Industry experts said the policy will provide a fillip to the Indian government's efforts to position India as a global automobile manufacturing hub, as well as benefit global automakers with manufacturing industries in India, including Japanese giants Suzuki, Toyota, Nissan, amongst others.

On July 26, 2019, the government proposed amendments to motor vehicle norms to allow scrapping of vehicles older than 15 years in a bid to spur adoption of electrical 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.