Government ready with draft of car scrapping policy

The ministry of Road Transport and Highways is ready with the draft of a scrapping policy that will give incentives to owners for surrendering old polluting vehicles.

The highly anticipated policy will be put in the public domain within a week to get the views of stakeholders and the general public, said union road transport and highways minister Nitin Gadkari. It is estimated that with this policy the turnover of the automobile industry will be increased by over four times to Rs 20 lakh crore in the next five years.

“We will put the vehicle scrapping policy on the website within a week to seek suggestions and based on that we will seek the finance ministry's approval. Once approved, it will be sent for the Cabinet nod,” said Gadkari.

The automobile industry in India currently has a turnover of Rs 4.5 lakh crore. With the new policy in place this is expected to increase to Rs 20 lakh crore in the next five years. “With this policy India can be the number one country to export the world's best cars,” added the minister.

Adding impetus to the emission control measures, the draft norms for the 'end of life' policy are likely to provide about 50 per cent rebate in excise duty on new vehicles for buyers who surrender their polluting old ones.

"We will set up industrial clusters near ports that will manufacture automobile parts at half the market rate. The labour cost in India is less. Car parts like copper, steel, plastic and aluminium would be available in plenty from old vehicles, which would be recycled at these clusters," said Gadkari.

The government last month said it is planning 29 port-based coastal industrial centres under coastal economic zones which will boost exports by $110 billion besides creating one crore new jobs. These clusters are being planned in the vicinity of India's top 12 major ports.

The government is also considering giving financial incentives of up to Rs. 1.5 lakh on surrender of over-ten-year-old vehicles to check pollution and address road safety concerns, said the minister.

The proposed policy will follow the government's earlier announcement to implement stricter emission norms for vehicles from April 2020 despite the auto industry calling it an "extremely challenging" task.

India plans to leapfrog to stricter emission standards of Bharat Stage-VI fuel specifications, skipping BS-V norms altogether, from April 1, 2020.

Under the proposed scrapping policy, people would get an incentive of up to Rs 30,000 for discarding small vehicles, while total benefits after taking into account the tax exemptions could be up to Rs 1.5 lakh for big vehicles like trucks, the minister had said earlier.