Govt may soon cap life of commercial vehicles at 20 years

NEW DELHI: The Centre’s ambitious vehicle-scrapping policy will become compulsory for all commercial vehicles from 2020 and their life will be capped at 20 years, a high-level meeting chaired by Nripendra Misra, principal secretary to Prime Minister Narendra Modi, decided on Friday, two senior government officials familiar with the development said.

The plan is to try to get the GST Council to consider a lower tax on new commercial vehicles bought against a scrapped one from the current rate of 28% to between 12% and 18%, one of the officials added on condition of anonymity. Vehicle manufacturers will also offer a discount on purchases against scrapped vehicles.

The road ministry has been directed to put up a proposal before the cabinet in three months, this person added.

Once the cabinet approves the scheme, and till the deadline of 2020 when it kicks in, owners of vehicles older than 20 years can voluntarily scrap their vehicles and receive a discount on the purchase of new ones, the first official said.

India has 700,000 trucks, buses and taxis manufactured before December 31, 2000 that contribute 15-20% of vehicular pollution, according to an analysis by AT Kearney based on data from Central Pollution Control Board and Union road ministry emission norms. The government expects 350,000 vehicles to be scrapped in the next two to three years. Besides Misra, Friday’s meeting was attended by NITI Aayog CEO Amitabh Kant, and secretaries of the ministries of finance, steel, environment, highways and micro, small and medium enterprises, the Department of Heavy Enterprises and DIPP.