Context:
Auto manufacturers have agreed to offer discounts on commercial and passenger vehicles against a scrappage certificate of an old vehicle for a limited period of time. This scrappage discount will replace the discount customers were getting for exchanging their vehicles from car dealers.
Relevance:
GS III: Infrastructure
Dimensions of the Article:
- Voluntary Vehicle-Fleet Modernization Program (V-VMP)
- Incentives Provided Under V-VMP
- Disincentives Provided Under V-VMP
Voluntary Vehicle-Fleet Modernization Program (V-VMP)
- The V-VMP aims to remove old and unfit vehicles from Indian roads by preventing their re-registration after they reach a certain age—20 years for cars and 15 years for commercial vehicles.
Recent Developments in V-VMP:
- Incentives for Vehicle Replacement: Automakers are offering discounts between 1.5% and 3%, or up to Rs 25,000, to encourage vehicle owners to scrap old vehicles and purchase new ones.
- Support from Commercial and Passenger Vehicle Sectors: There are incentives from commercial vehicle manufacturers for two years and from passenger vehicle manufacturers for one year, backed by a scrappage certificate.
Implementation Details:
- State Government Participation: Various state governments are actively involved, offering up to 30% discounts on road tax for vehicles that are bought as replacements for scrapped ones.
- Fitness Tests and Vehicle Scrapping:
- Private vehicles require a fitness test after 15 years; if passed, registration can be renewed for another five years.
- Commercial vehicles such as buses and trucks have different testing frequencies based on their age, with mandatory scrapping after 15 years of service.
- Government vehicles over 15 years old are also mandated to be scrapped.
- Vintage vehicles are exempt from this policy due to their infrequent use and maintenance status.
Benefits of the V-VMP:
- Environmental Impact: Estimated to reduce pollution significantly by scrapping approximately one crore vehicles, leading to a 15-20% reduction in vehicular emissions.
- Boost to Auto Industry: Expected to increase demand for newer, safer, and technologically advanced vehicles.
- Recycling and Economic Growth: The policy is likely to energize the recycling industry, creating jobs and enhancing waste and recycling management research and development.
- Safety and Efficiency Improvements: Promotes road and passenger safety and enhances fuel efficiency, particularly noting a 25% reduction in NOx emissions from upgraded BS VI compliant petrol engines.
Incentives Provided Under V-VMP
- Scrap Value Offer: The scrapping centers provide a scrap value approximately equal to 4-6% of the ex-showroom price of a new vehicle, encouraging owners to scrap old vehicles in exchange for a new purchase.
- Manufacturer Discounts: Auto manufacturers offer a 5% discount to consumers who show scrappage certificates when purchasing a new vehicle.
- Tax Concessions:
- Up to 25% tax concession on motor vehicle taxes for non-transport vehicles.
- Up to 15% tax concession for transport vehicles.
- Waiver of Registration Fees: New vehicle purchases following a scrappage will have registration fees waived, reducing overall costs.
Disincentives Provided Under V-VMP
- Increased Fees for Older Vehicles:
- Commercial vehicles older than 15 years face higher charges for fitness tests and fitness certificates.
- Private vehicles older than 15 years incur higher registration renewal fees.
- Green Cess: An environmental tax ranging from 10-15% is levied on older vehicles, aimed at discouraging the continued use of environmentally harmful vehicles.
-Source: The Hindu
