Concept note on voluntary vehicle fleet modernization programme released

The Ministry of Road Transport and Highways released a concept note on voluntary vehicle fleet modernization programme on May 26, 2016. 

Under the programme, vehicle owners are expected to replace their old vehicles (bought on or before March 31, 2005) with new ones. About 28 million vehicles are expected to be replaced through this programme.

Impacts expected from the programme include:

 (i) 25%-30% reduction in air pollutants,

 (ii) Lower oil consumption leading to oil import savings of
   about Rs 7,000 crore, and

(iii) Domestic generation of steel scrap worth Rs 11,500 crore
every year.

Vehicle owners replacing their vehicles through this programme will get monetary incentives in three forms:

(i) Partial exemption from excise duty (subject to approval from Ministry of Finance),

(ii) Special discounts from automobile manufacturers (subject to acceptance by the automobile manufacturers), and

(iii) Scrap value from the old vehicle. These benefits would amount to about 8%-12% of the vehicle cost.

In order to implement the programme, an IT system will have to be designed to enable the end-to-end process management of the programme. In addition, recycling and shredding centres will have to be set up. These centres will have to follow the ‘Guidelines for Environmentally Sound Management of End-ofLife Vehicles’ published by the Ministry of Environment, Forests and Climate Change.

The guidelines include details on

  (i) depollution of vehicles (removal of hazardous substances),

(ii) dismantling of the vehicles, and

(iii) processing of the residues.

Source : PRS Legislative Research (“PRS”)