Scrapping old cars may earn 50% excise cut on new ones The Times of India, Kolkata, Monday, January 18,2016

Policy Plan Likely Within Two Weeks

The government expects at least 25 lakh vehicles, excluding two-wheelers, to go off roads once it announces its scrapping policy for vehicles older than 15 years.

Sources in the road transport ministry said initially, the policy would be voluntary , with incentives to encourage people to replace their old cars with new ones.

“About 50% reduction in excise tax for those who buy new vehicles after selling old ones will be a big motivating factor. There will be a sudden increase in demand for vehicles and the initial revenue loss can be compensated in a few years,“ an official said.

A policy proposal is likely to be sent to the finance ministry in a fortnight. TOI had on August 14 first reported that the ministry was looking at providing relief of Rs 1.50 lakh for giving up old vehicles and buying new ones.

According to government data, at least one crore vehicles registered between 1990 and 2000 would qualify for the scrapping but the actual number phased out would depend on people's participation. The government estimates that a minimum 25% of such vehicle owners would prefer to replace their old vehicles.

Transport minister Nitin Gadkari has announced the rollout of the policy soon to reduce vehicular pollution.

Last week, automobile manufacturers had asked the government to bring the policy quickly as Gadkari stuck to the April 2020 deadline for rolling out BS-VI emission norms for vehicles. The government believes the scrapping policy will push up annual demand for vehicles, which is pegged around 35 lakh, and that would be enough enticement for the industry to step up production of cleaner vehicles.

The transport ministry and the automobile industry are on the same page on the issue of formulating a scrapping policy based on the “age“ of vehicle and this is being seen as a “tradeoff “ by auto makers. “This certainly is a highly arbitrary and irrational move to appease the auto industry in the garb of containing air pollution. This unilateral action is against the interest of truck operators and livelihood of lakhs in interiors of the country, who are away from big cities. If old vehicles are unfit to operate, then the same could be the case with newer but poorly maintained vehicles,“ said S P Singh of IFTRT, a think tank on transport issues.