FinMin gives nod to scrap vehicles over 15 yrs, policy to go to GST Council

The policy is aiming at curbing rising vehicular pollution in the country

The finance ministry has approved the much-awaited policy to scrap vehicles that are more than 15 years old and the document will now go to the GST Council, a source said on Tuesday.

The development comes barely a fortnight after Road, Transport and Highways Minister Nitin Gadkari has announced that Vehicles Scrapping Policy, aimed at curbing rising vehicular pollution in the country, has almost been finalised.

"Finance Ministry has approved the Vehicle Scrapping Policy. A Cabinet note is getting prepared. Now it will go in the GST Council for fixing concessions by the states and the Centre," a source in the know of the development said.

The Goods and Services Tax (GST) Council will decide the amount of concession that GoI and state governments will offer, the source said.

The Road Transport and Highways Ministry is keen on implementing the Voluntary Vehicle Fleet Modernisation Programme (V-VMP) policy that aims at scrapping 15-year-old commercial vehicles in the first phase.

Gadkari at an event here today said the policy was needed to curb vehicular pollution as well as given the annual 22 per cent growth rate of the automobile industry that will require an additional highway lane every third year, costing Rs 800 billion.

He said once the policy is approved the country is bound to become the hub for the automobile industry and the prices were bound to be cheaper as scrap could be used for the production of autoparts among other things.

Earlier, the Road, Transport and Highways Ministry had sent a concept note on Voluntary Vehicle Fleet Modernisation Programme (V-VMP) to the Committee of Secretaries on creating an ecosystem for voluntary scrapping and replacement of old polluting vehicles.

The V-VMP policy proposes to take 28 million decade-old vehicles off the road.

Gadkari had earlier said that the PMO is keen on the proposal and once it is implemented, pollution would be checked considerably as 65 per cent of the pollution is caused by heavy vehicles that are more than 15 years old.

As per an earlier proposal, a relief of about Rs 0.5 million was to be provided to people who purchase new commercial vehicle of about Rs 1.5 million, if they surrender their over 15-year old commercial vehicles.

Gadkari has said that once the proposal is accepted it is bound to result in Rs 100 billion boost in tax revenue as the automobile sector will benefit from it.

The draft Voluntary Vehicle Fleet Modernisation Programme (V-VMP) policy has proposed to bring under its purview vehicles bought on or before March 31, 2005, numbering about 28 million.