Government puts emergency brakes on its plan to scrap 28 million vehicles from before 2005

The road transport ministry has proposed to retire nearly 28 million vehicles that were purchased before 2005, but the central government has, for the time being, put the proposal on hold.

In its concept note 'Voluntary Vehicle Fleet Modernisation', the road transport ministry had proposed that buyers who buy a new vehicle after surrendering old one be given a cut in excise up to 50%, while offering fair value for the scrap material and discounts by auto manufacturers.

As per estimates, this would have cut the new vehicle’s cost by as much as 812%. However, the government told the Supreme Court that a voluntary vehicle scrapping policy was being planned to beat vehicular pollution.

Also, the finance ministry has indicated that rather than giving excise tax rebate, one could also explore the option of giving upfront cash incentive to people who are ready to scrap their old vehicles.

"In cash incentive option, there'll be a cap on the amount. The excise cut could benefit bigger vehicles more than smaller ones," a government source told ET.

Experts also think that even though the road transport ministry claims that this policy would reduce annual emission by 25-30% and annual oil consumption by 3.2 billion litres, it is actually being done to increase vehicle sales.

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