Scrap an old car, get freebies for a new one

Excise duty and taxes account for almost half the cost of a new vehicle. The Ministry for Transport and Highways suggests that offering a tax rebate on a new vehicle would tempt owners to scrap old polluting vehicles. If proved successful, the move would replace 28 lakh vehicles that are more than 15 years old with new vehicles.

India has over 40 lakh vehicles in this category. But if two-wheelers are also taken into account the total number is one crore.

Voluntary Vehicular Fleet Modernisation Policy (V-VMP), conceived by the Transport ministry, has the potential to reduce vehicular pollution by 25-30 per cent. Dumping pre-Bharat Stage II vehicles will save fuel consumption by 3.2 billion litres a year.

The proposal can directly boost automobile sector turnover to Rs20 lakh crore in five years. The Society of Indian Automobile Manufactures has been calling for a government initiative to replace old vehicles with new ones.

The transport ministry is trying to convince the finance ministry that a temporary drop in revenue will be compensated by the surge in sales up to 40 per cent. The policy is yet to be cleared by the finance ministry.

If the plan is approved, old vehicles can get a discount of up to Rs30,000 for small cars and Rs1.5 lakh for trucks.

Government is for enforcing BS-VI emission norms by 2020, skipping BS-V, which the manufactures say is “extremely challenging.” Officials estimate that the measure would reduce vehicular emission by 80 per cent.

Ban not an option
Ban can only antagonise people as many of them cannot afford to buy a new car. If trucks are off the road, shortage and price rise of goods can turn people against the scheme.

Realising that a ban on vehicles will not work, the transport ministry is hoping to clean up Indian cities with V-VMP. In the next phase, the policy will cover two-wheelers as well.

Incentives for scrapping
The benefit of scrapping a vehicle will come under three heads—immediate payment of the vehicle’s scrap value and on purchase of new vehicle, a discount on excise duty plus a special discount from the automobile manufacture. This will save 8-12 per cent for the total cost of the new vehicle.

Decongest roads
The report envisages a boost for public transport bus by granting full excise duty exemption to purchase new, energy efficient and less-polluting buses.

How to scrap
The owner should deposit copies of the documents of the vehicle to be scrapped—Registration Certificate, Insurance and identity of the owner—at the collection centre of the recycling centre. On verification, the owner will get a message to take the vehicle to the shredding centre. The scrap value will be decided. If agreed the scrap value along with V-VMP certificate will be issued.

The owner can claim the discount at the time of purchase of a new vehicle.