Voluntary Vehicle Fleet Modernisation Plan May Make New Cars Cheaper

The proposed policy includes a total of 3 incentives: scrap value from the old vehicle, a special discount by the automobile manufacturer, and a partial excise duty exemption. The Ministry said the three benefits together will amount to roughly 8-12 per cent of the total cost of the new vehicle. It also proposes 50 per cent excise duty relief for vehicles bought under this scheme, based on respective categories of the old and replacement vehicle. Furthermore, to guarantee a positive impact on the environment, the replacement vehicle will need to be BS-IV compliant, which will be rolled out nation-wide by April, 2017.

When approved, the 'Voluntary Vehicle Fleet Modernization Plan (V-VMP)' will be applicable to the vehicles bought on or before 31 March, 2005. A draft of the policy states "the total potential vehicles to be replaced with this definition are nearly 28 million." It also mentions that the policy is likely to aid sales too, thus leading to the growth of production capacity utilisation. In fact, Gadkari had earlier said the policy will boost the automobile industry's turnover over four-times to Rs 20 lakh crore in the next five years.