A new policy on surrendering old cars will bring 8-12% reduction in car costs

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The Ministry of Road Transport and highways plans on gathering 28 million over the vehicles that are more than 11 years old and are a major source of pollution. That is why they have submitted a new policy change to the department of Finance Ministry to seek approval on this new idea.

This new policy dubbed as V-VMP (Voluntary Vehicle Fleet Modernization Plan) that offers incentives worth 8 to 12 percent of the total cost of a brand new vehicle if an owner surrenders an old one.

Speaking on this policy the Road Transport and Highways minister Gadhkari said, that they have submitted this vehicle scrapping policy to the Finance Minister and believe that this is a good policy which on approval will be taken to the Union Cabinet. He further added that this policy is a great step towards achieving environment friendly measures and hence, is of interest to the government.

This effective plan proposed for voluntary vehicle modernization will work in three phases, the value of scrap from the old car, a partial excise duty exemption and a special discount that must be offered by the automobile manufacturer.

The minister further clarified that this policy of Voluntary Vehicle Modernization Plan will be applicable on vehicles that have been bought on or before the 31st of March, 2005 and have invited the general public and stakeholders for their comments on the draft policy. The draft policy also outlines that the total probable number of vehicles that are to be replaced form a whopping 28 million.

So, the people who are surrendering their old vehicles when purchasing a new one under the scheme will receive all of three benefits which may amount to a reduction of 8 to 12 percent in the cost of the new vehicles as per the ministers.

Furthermore, to make sure that the policy impacts the environment in a good way, it also suggests that the new vehicle obtained must be compliant with BS-IV, and this policy will be later rolled out across the nation by the end of 2017.

This policy also has something good for the car manufacturers including buyers and the government by giving a boost to car sales with high amount of production capacity utilization. Moreover, by supporting the government with this initiative will allow them to give special discounts to the customers buying vehicles under this proposed scheme and gather more leads.

Previously the minister Gadhkari had told the newspapers and mass media that this proposed policy is expected to boost the automobile industry turnover by 4 times in the next 5 years, which will then amount INR 20 Lakh.

While the scheme is still subject to being approved by the Finance Ministry, it outlines that a possible reduction of 50 percent of the excise duty will be applicable which will depend upon the make and model of the old vehicle or the replaced vehicle category.

Also another great step proposed by the draft outline of the scheme is with the State Road Transport Undertaking (SRTU) buses which may be offered 100 percent off on excise duty to further boost the modernization of state-run fleets of buses. All in all this policy is a true marker of positive, environment friendly incentivized scheme on the government’s part which will actively involve the car driving citizens to think and care about the earth’s health along with the health of their wealth when it comes to a down weighing farce asset like vehicles. Vehicles are not in actuality assets at all but more of financial goals lying somewhere between utility and luxury and with such friendly policies this sector of industry could see a hike in sales.

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