Vehicle scrap policy gets nod at PMO meet: Over 20-year-old CVs to face axe

Cut off date for implementation of vehicle scrapping policy to be April, 2020; policy to go to GST Council for reduction in rate

The much-awaited vehicle scrap policy was given 'in-principle' approval at a high-level meeting at the PMO to pave way for mandatorily disposal of commercial vehicles (CV) that are more than 20 years old from April 1, 2020, an official said.

The development follows Road, Transport and Highways Minister Nitin Gadkari's announcement that the Vehicles Scrapping Policy, aimed at curbing vehicular pollution, has almost been finalised.

"A high-level meeting, chaired by Principal Secretary to the prime minister and comprising secretaries from different ministries in principle approved the vehicle scrapping policy today," the official, who did not wish to be quoted, said.

The policy will be effective from April 1, 2020, and life of the commercial vehicle for scrapping has been fixed at 20 years, the official added.

The meeting was attended by NITI Aayog CEO Amitabh Kant, Secretaries of Finance, Road, Transport and Highways, Heavy Industries and Steel departments, among others.

A source in the know said that the matter will go to the GST Council where it has been requested to reduce the GST rate to 18 per cent from 28 per cent for a new commercial vehicle that would be purchased in place of a scrapped vehicle.

The GST Council will decide the amount of concession that the Centre and the states will offer.

"The overall benefit of buying a new vehicle in place of scrapped vehicle would be about 15-20 per cent of the new vehicle cost," the source said.

Asked whether the Cabinet nod is required for the policy, the official said that though the nod is not required but since it is a major decision so it may go to the Cabinet.

The Finance Ministry recently approved the policy.

The Steel Ministry will come out with recommendations for scrapping centres while the Environment and Forest Ministry will come out with rules and regulations, the official said.

The Ministry of Road Transport and Highways may come out with a notification in this regard within three months and based on that the states will be consulted.

The Road Transport and Highways Ministry is keen on implementing the Voluntary Vehicle Fleet Modernisation Programme (V-VMP) policy that aims at scrapping 20-year-old commercial vehicles in the first phase.

Gadkari has recently said the policy was needed to curb vehicular pollution as well as given the annual 22 per cent growth rate of automobile industry that will require an additional highway lane every third year, costing Rs 80,000 crore.

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.