Breakfast with BusinessLine. New cars for old: scrapping policy on the anvil

The government is considering incentives to encourage vehicle owners to scrap old cars, a scheme that will deliver multiple benefits including reducing pollution, boosting growth of the industry and generating jobs, said Nitin Gadkari, Union Minister for Road Transport, Highways and Shipping.

At an interactive session with senior corporate executives, organised by BusinessLine , Gadkari said his Ministry has formulated a policy that will encourage owners to scrap 10-12 year old cars.

The scheme is awaiting the Finance Ministry nod following which it will go for Cabinet approval.

At the event,

Breakfast with BusinessLine , moderated by the Editor, Raghavan Srinivasan, Gadkari said the move has the potential to double the size of the automobile sector as sales will increase and costs will come down for manufacturers.

Also, with the government opting for Euro VI emission norms from April 2020, India can be a global supplier of cars.

Exports, now valued at about ₹ 4.5 lakh crore, could double.

All this means more job generation and bigger revenue for the government.

Outlining the scheme in response to a question from Vinod K Dasari, Managing Director, Ashok Leyland and President, Society of Indian Automobile Manufacturers, the Minister said if an owner “surrenders the number plate of an old car, an incentive of about ₹ 50,000-60,000 — about 10 per cent of the cost of vehicle— tax concessions and matching discount from the car manufacturer totalling about ₹1.5-2 lakh” can be given on the purchase of a new car.

This will increase manufacturing by 20-25 per cent.

Car scrapping yards can also be set up close to ports.

Then waste from abroad will be brought in at a cheaper rate to increase raw material availability for car makers. This will help to reduce cost of new cars and spare parts.

YJ Ahn, Executive Director – Corporate Affairs, Hyundai Motor India, suggested the government could consider incentives to encourage coastal shipping for moving cars.

This will help reduce pollution and fuel costs. Hyundai had moved 800 cars by coastal shipping earlier this year but found it more expensive than moving by road.

Gadkari said the government is keen on encouraging coastal shipping and Hyundai could give its suggestion in writing.

The Ministry will consider measures to reduce costs to make it viable but will need the approval of Finance Ministry which could be tough, he said.