Road Transport and Highways Minister Nitin Gadkari on Tuesday said that the draft vehicle scrapping policy would offer a combined benefit of Rs14,000 crore to the Centre and States, and drive the auto industry growth by 22 per cent.

Gadkari said that the proposed Voluntary Vehicle Fleet Modernisation Programme (V-VMP) aims to scrap heavy vehicles that are more than 15 years old in the first phase and its draft would be sent to the Cabinet soon. “The Central Government will benefit by Rs4,000 crore and State Governments will benefit by Rs10,000 crore, while automobile industry will grow by 22 per cent,” Gadkari said during his address at the annual meeting of Automobile Component Manufacturers Association of India (ACMA).

Gadkari had met Finance Minister Arun Jaitley in this regard and policy is being finalised by taking into consideration the latter’s suggestions too. Gadkari said it would be formulated in such a fashion that those surrendering their old vehicles will get some financial benefits.

“At the time of new purchase, manufacturer will offer some concession, Government of India will provide some and there would be value for the scrap,” he said.

The Road Transport Minister further informed that the policy would curb pollution as 65 per cent of the vehicular pollution is caused by heavy vehicles like trucks and buses and scrapping of these will be done at industrial clusters like Kandla to be set up under the Government’s ambitious Sagarmala project.

The draft V-VMP policy had earlier proposed to bring vehicles bought on or before March 31, 2005, numbering about 28 million, under its purview. Gadkari had then said the benefits of the policy include additional net revenue of over Rs21,000 crore on account of additional automobile sales, besides crude oil savings of Rs7,700 crore due to improved fuel efficiency.

Once the policy is finalised, it is estimated to result in domestic steel scrap generation worth Rs5,500 crore to substitute imported scrap, he said adding that it would create huge employment. According to the Ministry, the proposed policy has the potential to reduce vehicular emission by 25-30 per cent and save oil consumption by 3.2 billion litres a year.