Scrappage policy wants to get rid of old polluting commercial vehicles in India

The Indian Government is working on a scrappage policy to get rid of the old vehicles plying on the streets of India as they are a major source of pollution. The final draft, that is waiting for the final clearance from the Union Cabinet, goes in lines with the Government's decision of setting up vehicle scrapping centres in different parts of the country. It is being said that the new scrappage policy is expected to offer disincentives for older vehicles and also a tremendous increase in the re-registration fee for vehicles older than 15 years.

As mentioned to Mint by a government official, the whole intention of the scrappage policy is to get rid of the old commercial vehicles that play a primary role in the economic and freight movement. Also, since they account to 65 per cent of the total air pollution, this could be an effective way of curbing that. To incentivise the process, the govt. is planning to levy a lower GST or even waive it off completely on replacement of commercial vehicle, which at present is 28 per cent. Further, concessions could be offered to buyers who are replacing their old vehicle with a new one, provided they submit documents of sale of the old vehicle.

The other side of the scrappage policy is to encourage new vehicle sales as the slowdown has plagued the economic growth of the country. The after effects of which have compelled manufacturers to lay off their work force and also shut their manufacturing plans for weeks, in addition to offering discounts on their existing offerings. As per the sales reports by SIAM, the wholesale YoY Apr-Nov. numbers of medium and heavy-duty trucks fell by over 41 per cent, also negatively impacting the commercial vehicle industry by 22 per cent.

To counter the slowdown, major truck manufacturers are offering a hefty discount of up to Rs 9 lakh on their 40-49 tonne trucks. With this, the companies intend to clear their BS IV fleet of vehicles. In an interview to ET, a govt. official states, "The Central government will not offer any direct incentives in the policy or any tax sops, as was being talked about earlier. State governments will be free to offer rebates on road tax against a scrapping certificate. Even original equipment manufacturers can allow a discount against a scrapping certificate if they want to boost their sales. We are making minor changes based on comments received on the draft guidelines for scrapping centres and the scrapping policy will follow soon."

In addition to reducing the harmful effects of air pollution, the government also wants to reduce oil consumption by 3.2 billion litres per year, which will benefit in saving Rs 7,000 crore in oil import. The scrappage policy is also expected to fetch the government a boost in tax revenue which could be in the range of Rs 10,000 crore, reports NeoStencil.