The automotive industry welcomed the announcement by Union Finance Minister Nirmala Sitharaman of a voluntary scrapping policy for both commercial vehicles (CVs) and passenger cars (PVs). However, most industry participants are waiting for more information about the forms in which the strategy will be applied.

A long-term demand from the automotive industry has been a strategy of phasing out age-old automobiles. Such a programme will not only improve sales but will also take care of automotive emissions by eliminating old vehicles from the roads.

“To phase out outdated and unfit cars, we are announcing a voluntary vehicle scrapping scheme separately. This would help encourage fuel-efficient, environmentally-friendly vehicles, thus reducing automotive emissions and bills for oil imports. After 20 years in the case of personal cars, and after 15 years in the case of commercial vehicles, vehicles can undergo fitness checks in automated fitness centres. The Ministry will share specifics of the scheme separately,” the finance minister had said.

Expressing that the strategy would cover more than one crore light, medium and weighty engine vehicles, Road Transport, Highways, and MSMEs Minister Nitin Gadkari said that subtleties of the Voluntary Scrappage Policy will be pronounced within 15 days. Gadkari said that the policy will prompt new ventures of around Rs 10,000 crore and create as numerous as 50,000 jobs.

“The approach would cover an expected 51 lakh Light Motor Vehicles (LMVs) that are over 20 years old, while another 34 lakh LMVs are over 15 years. It would likewise cover 17 lakh medium and weighty engine vehicles, which are over 15 years, and as of now without legitimate fitness certificates,” Gadkari said. These vehicles are assessed to cause 10-12 times more contamination than the most recent vehicles.

A month ago, the government had said that it intends to force a green tax on old polluting vehicles soon in a bid to protect the environment  and control contamination while vehicles like solid hybrids, electric vehicles and those running on substitute energizes like CNG, ethanol, and LPG will be excluded. The income gathered through the green tax will be used for handling pollution.

Under the plan, transport vehicles older than eight years could be charged green tax at the time of renewal of fitness certificate  at the pace of 10 to 25% of road tax, according to the green tax proposition sent to  states for conferences after it was cleared by the ministry.

In 2016, the Ministry of Road Transport and Highways had circulated a draft strategy for the setting up of a scrappage policy for vehicles of a particular age. The declaration was an outcome of meetings at different levels

The move has been invited by the automotive business in general. Kenichi Ayukawa, president  of the Society of Indian Automobile Manufacturers (SIAM), said that the industry would be enthused about working with the government for augmenting benefits. “Great macroeconomic development will mean great auto sector demand. In particular, the vehicle scrappage policy has a good intent and the automobile industry would be keen to work with the Government of India on recommendations for augmenting advantages to the environment and the society,” he said.

Referring to industry figures, Girbane said that around 9 million vehicles could go off the roads by the monetary year 2021-22 and 28 million, by 2025.