2016 Budget May Include End of Life Policy for Old Vehicles

In wake of the various restrictions implemented on private car users, particularly in New Delhi, the 2016 Budget may include an end of life policy for cars whereby customers looking to buy new vehicles will be able to enjoy a rebate of at least 50 per cent in excise duty if they surrender their old polluting vehicles to the mercy of a scrapyard. A source has also indicated that the Budget may see some major announcements that will instigate heavier investment in the field of green vehicles, reports PTI.

Speaking with regards to the end of life policy, the source said," Road Transport and Highways Minister Nitin Gadkari, has urged Finance Minister Arun Jaitley to provide at least 50 per cent rebate in excise duty on purchase of new vehicles by buyers who surrender their old polluting vehicles for scrapping. Ministry has also requested that accelerated depreciation of up to 50 per cent may be given to auto industry on additional investment for bringing environment-friendly vehicles."

When speaking with Jaitley, Gadkari reportedly supported his ideas and demands by stating the benefits of bringing such a scheme to effect. Not only would it boost the economy and generate fresh job opportunities, but it would also be greatly helping the cause of reduction in air pollution by preventing vehicles with old technology from operating on the roads. With most governments imposing ever tightening pollution norms on auto makers, combustion engines are constantly being reworked to reduce carbon emissions. Hence, older vehicles, especially those that run on diesel, are likely to pollute a lot more than their modern day equivalents.

Gadkari has already stated that the government is planning on offering car owners financial incentives of up to Rs.1.5 lakh to scrap vehicles that are over 10 years old in an attempt to help alleviate pollution and address safety concerns. Gadkari, along with Road Transport Ministry officials, met with Jaitley during a pre-Budget consultation.

These demands have come to light soon after the government's decision to push forwards the date of implementation of the far stricter BS-VI emission regulations to April 2020 despite the auto industry's numerous concerns. The biggest challenge for the industry will be to leapfrog BS-V norms completely, a task that has never been implemented or performed anywhere else in the world. As of last week, when Gadkari met the heads of 26 automobile companies, the industry has agreed to try its best to bring about this rapid and drastic change in engine technology if certain conditions are met and assurances made by the government on the availability of BS-VI type fuel across the entire country.

AS for the end of life policy, Gadkari said that the government is in the process of coming up with a new incentive policy for scrapping vehicles older than 10 years. The proposal will soon be sent to the Finance Ministry for approval. Under the proposal, small vehicles like cars would attract an incentive of Rs.30,000 whereas the sum total of benefits after taking tax exemptions into account could be up to Rs.1.5 lakh for larger vehicles like trucks. PTI also reports that the policy will likely be valid for all vehicles over 10-years, across the country.

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