Budget 2016: Road ministry seeks 'end of life' policy for old vehicles in Union Budget

Seeks a rebate of 50% in excise duty on new vehicles for buyers who surrender their old, polluting vehicles

An ‘end of life’ policy may be announced in the Budget that may include a rebate of at least 50% in excise duty on new vehicles for buyers who surrender their polluting old ones.

Besides, the Budget may see some major announcements for automobile manufacturers which bring investments on green vehicles, a source told PTI.

“Road Transport and Highways Minister Nitin Gadkari has urged Finance Minister Arun Jaitley to provide at least 50% rebate in excise duty on purchase of new vehicles by buyers who surrender their old polluting vehicles for scrapping,” the source said.

Gadkari is said to have told Jaitley that this would not only boost the economy and create massive employment, but also lead to a major reduction in pollution, the source said.

On scrapping of old polluting vehicles, Gadkari has already said that the government is considering giving financial incentives of up to Rs 1.5 lakh on surrender of over-ten-year-old vehicles to check pollution and address road safety concerns.

“Ministry has also requested that accelerated depreciation of up to 50% may be given to auto industry on additional investment for bringing environment-friendly vehicles," the source said.

Jaitley had pre-Budget consultations with Gadkari and Road Transport Ministry officials on January 15.

The demands come close on heels of government announcing a decision to implement stricter emission norms for vehicles from April 2020 despite the auto industry calling it an "extremely challenging" task to move up to BS-VI fuel specifications, skipping BS-V norms altogether.

Last week in a meeting with Gadkari, 26 heads of automobile companies in India had suggested that compliance with BS-VI norms will be extremely challenging, but the industry will work out a way so that all new models are BS-VI compliant from 2020.

The automobile manufacturers have also sought assurance from the government on fuel availability across India when the country moves to the stricter emission norms by 2020.

Regarding the ‘end of life’ policy for polluting vehicles, a proposal to formulate the new incentive policy for surrendering old vehicles is being worked out and would be soon sent for the Finance Ministry's approval, Gadkari has said.

Under the proposed policy, people would get an incentive of up to Rs 30,000 for discarding small vehicles like cars, while total benefits after taking into account tax exemptions could be up to Rs 1.5 lakh for big vehicles like trucks, the minister has said.

The new policy is likely to be valid for over-ten-year-old vehicles across the country.