With the Supreme Court coming down hard on air pollution and asking authorities to ban diesel vehicles, the Centre has expedited the policy to scrap about 15 lakh heavy vehicles that are over 15 years old in its first phase of scheme.
Sources said the draft policy is in its last leg of finalisation and would be placed before the Union Cabinet in a fortnight. Road Transport Minister Nitin Gadkari met Finance Minister Arun Jaitley last week following which it was decided to make the scrap policy a mandatory exercise. Sources in the Road Transport Ministry said the policy may provide benefits of Rs2-3 lakh for every heavy vehicle to be scrapped.
While vehicle owner may mourn the policy, it will come as a boon to automakers. They could net additional revenue of over Rs21,000 crore. The Government can also save around Rs7,700 crore due to improved fuel efficiency of the new vehicles. The automobile industry’s turnover in the country is Rs4.5 lakh crore.
“We intend to scrap 15-year-old about 12-15 lakh heavy vehicles, mostly trucks and buses, in the first phase of our proposed Voluntary Vehicle Fleet Modernisation Programme (V-VMP). The draft policy would be ready in a fortnight,” said a senior Road Transport and Highways official. 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.
Once the policy is finalised, it is estimated to result in domestic steel scrap generation worth Rs 5,500 crore to substitute imported scrap. The scheme is also expected for employment generation as there will be huge demand for workforce for scrapping/recycling operations and automobile manufacturing.
According to the Road Transport 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.
The official said 65 per cent of the vehicular pollution is caused by heavy vehicles and scrapping of these will be done at industrial clusters like Kandla to be set up under the Government’s ambitious Sagarmala project.
The Finance Ministry in this regard has suggested that instead of excise tax exemptions, funds will be provided for this in the Budget. The Government is also expected to take permission from the GST Council as “the tax structure is likely to change”.