Budget 2016 likely to provide incentive for surrendering old vehicles

Incentive may be in the form of excise duty on purchase of new vehicles by buyers who surrender their old polluting vehicles

Finance minister, Arun Jaitley may come out with a policy in the upcoming budget offering financial incentives on surrender of vehicles that are over 10 years old. The aim is to promote the replacement of old vehicles with modern ones which are fuel efficient as well as better emission standards.

However sources in the road ministry informed that the policy may be initially announced for commercial vehicles and later on may be extended to private vehicles, as private vehicles are better maintained and less polluting than the commercial one.

Sources informed that during a pre-budget consultations meeting, Road, Transport and Highways minister Nitin Gadkari insisted Finance Minister, Arun Jaitley to provide incentives in form of excise duty on purchase of new vehicles by buyers who surrender their old polluting vehicles.

Sources further informed that the pre-budget meeting was followed by consultative meeting with finance ministry officials last month in which the proposal was submitted. Sources in the finance ministry also confirmed that a proposal has been submitted by Road, Transport and Highways ministry to offer incentives to a person who surrenders his old vehicle and buys the new one.

Further, last week in a meeting with Gadkari, 26 automobile companies represented by heads and representatives urged the government to bring scrap page policy and to take a relook on fitness regime of the vehicles.

The move will not only help in reducing pollution which have reached alarming levels in many cities but would also give fillip to the automobile Industry as the buyers can upgrade themselves with better fuel efficient and better emission compliant cars.

Since, the government also announced to implement BS-VI norms, skipping BS-V from 2020, the decision will assist the car makers to boost sales.

Earlier, Nitin Gadkari said that the ministry is planning to bring a scheme  that if a person sells his old vehicle, he will get a certificate which on being produced at the time of new purchase will get you a discount of up to Rs 50,000. For small vehicles like cars it will be up to Rs 30,000. Besides, there will be exemptions in taxes and total benefits for big vehicles like trucks will be up to Rs 1.5 lakh.

Such ‘cash-for-clunkers’ schemes have been introduced in some countries like the USA, UK, Germany, France and Spain, for limited periods.

The government is planning to set up 8-10 industrial units near ports like Kandla(Gujarat) which will not only give certificates for accepting old vehicles but would recycle vehicles from India and abroad and thereby give a boost to employment and economy.