To reduce the carbon emission level in the country Indian government is planning to introduce a new vehicle scrappage policy which will offer the owners of the old cars a three stage incentive of 8% – 12% on the new car purchase if they let go their old cars and old two wheelers. This scheme will eventually help in reducing the carbon emission in the country by 17%. Apart from that, this scheme will also generate scrap steel of around Rs. 11500 crore per year across the country.
The new vehicle scrappage scheme has been dubbed as Voluntary Vehicle fleet Modernisation Program or V-VMP. This V-VMP scheme will cover those vehicles which were manufactured before 31st March, 2005. The government is evaluating the potential of the scheme at present and it has invited comments and views from the share holders on the scheme.
The old vehicles emit higher amount of pollutant gases into the environment than the newer ones. Therefore the scrappage scheme will significantly reduce the emission level. Indian government believes the V-VMP scheme for larger vehicles like the buses and trucks will reduce the CO emission by 17%, HC + NOx emission by 18% and the particular matter emission by 24%.
To promote the scheme government will offer the owners of the old vehicles a three stage incentive on the new cars they buy giving up their old cars. The three stages are value from the scrap metal of the old car; the automakers will offer special discounts on the new cars and partial exemption on excise duty. Overall while purchasing a new car the owner of the old car can earn an incentive of around 8% to 12%.
On the scrap metal front the V-VMP scheme is expected to generate scrap steel valuing around Rs. 11500 crore per year, which will reduce the country’s import burden and help to improve the economy as well. The large vehicles like buses and trucks are expected to generate around 50% of the scrap steel. The Indian government is already setting up automobile shredding plants which will be used in the V-VMP scheme. The government expects around 28 million old cars across the country will come under the V-VMP scheme.