New Delhi: The government is considering a proposal to provide more tax-related concessions on vehicles that are purchased after scrapping old vehicles under the recently launched National Automobile Scrappage Policy, Union Minister Nitin Gadkari said on Tuesday.
While inaugurating Maruti Suzuki Toyotsu India's first government-approved scrapping and recycling facility for end-of-life vehicles (ELVs), Gadkari also said the scrappage policy is going to reduce pollution.
"The GST revenue of both the Centre and states will rise due to the scrappage policy... I will discuss with the finance ministry on how to provide more (tax-related) concessions under the new vehicle scrappage policy," he said.
Under the new policy, the Centre had said the states and Union Territories (UTs) will provide up to 25 per cent tax rebate on road tax for vehicles that are purchased after scrapping old vehicles.
The road transport and highways minister said he is also requesting the GST Council to explore what more incentives can be provided under the National Automobile Scrappage Policy.
"The final decision (on providing more incentives under the National Automobile Scrappage Policy) will be taken by the finance ministry and the GST Council," he said.
The minister added that the scrappage policy will benefit all stakeholders as it will boost manufacturing, create jobs and help both the Centre as well as state governments in earning up to Rs 40,000 crore each in GST.
He said the scrappage policy will be one of the key factors to control pollution and create jobs.
"Old cars are much more polluting than new ones. So, they need to be phased out. We expect sales to grow 10-12 per cent due to scrappage policy," the minister said.
Gadkari pointed out that old vehicles cause pollution, which is a big problem for society.
"Scrapping is important for the economy. We will get all raw materials at lower cost by which we can lower production cost," he said.
Gadkari also informed that the Centre is planning to introduce at least 3-4 vehicle recycling or scrapping centres in every district of the country.
"In the next two years, the country will have 200-300 more scraping centres," he said.
Gadkari said the auto sector has an annual turnover of Rs 7.5 lakh crore and his target is to take it to Rs 15 lakh crore in five years.
"India aims to have net-zero emissions by 2070 and it's very important for us. I am confident that the scrappage policy is one of the solutions," he said.
Also, speaking at the event, Kenichi Ayukawa, MD and CEO of Maruti Suzuki India Ltd, said, "Like many countries, we need a policy where fitness is checked for vehicles every 3-4 years. We don't need to wait for 15 years."
Prime Minister Narendra Modi had launched the National Vehicle Scrappage Policy in August and had said it will help phase out unfit and polluting vehicles and also promote a circular economy.
The policy will give a new identity to India's mobility and auto sector, Modi had said.
Under this policy, people who give their old vehicle for turning it into scrap will be given a certificate by the government. People having this certificate will not be charged any registration fee on the purchase of a new vehicle.
Vehicle manufacturers are also advised by the government for providing a discount of five per cent on the purchase of a new vehicle against the scrapping certificate.
The vehicle scrappage policy will come into effect from April 1, 2022.
Announced in the Union Budget 2021-22, the policy provides for fitness tests after 20 years for personal vehicles, while commercial vehicles will require it after the completion of 15 years.
Maruti Suzuki Toyotsu India Pvt Ltd's 10,993 square metre facility has a capacity to scrap and recycle over 24,000 ELVs annually.
According to the company's statement, built with an investment of over Rs 44 crores, the facility uses modern and technologically advanced machines to dismantle and scrap ELVs in a scientific manner.
Aligning with the vision of Atmanirbhar Bharat, all the equipment being used at the facility is manufactured in India, it said.
Maruti Suzuki Toyotsu India Pvt Ltd was established on October 22, 2019, as a 50:50 joint venture between Maruti Suzuki India Ltd (MSIL) and Toyota Tsusho Group (Toyota Tsusho Corporation) and Toyota Tsusho India Pvt Ltd.
According to an official statement, the existing vehicle dismantling and recycling industry in India is unorganised and recycling of older vehicles is not done in an environment-friendly manner.
The existing ELV scrapping cycle has a low recovery percentage and many materials get wasted or are not properly recycled, it added.
As per unofficial industry estimates, the recovery percentage in India is about 70-75 per cent, while global benchmarks for recovery from scrapped vehicles is in the range of 85-95 per cent.
