Vehicle scrapping policy to provide Rs 14,000-cr benefit: Nitin Gadkari

New Delhi: The draft vehicle scrapping policy would offer a combined benefit of Rs 14,000 crore to the Centre and states and drive the auto industry growth by 22 percent, Union Minister Nitin Gadkari said Tuesday.

The proposed Voluntary Vehicle Fleet Modernisation Programme (V-VMP) aims to scrap heavy vehicles that are more than 15 years old in the first phase and its draft would be sent to the Cabinet soon, Gadkari, Minister for Road Transport and Highways, said here.

Addressing the annual meeting of Automobile Component Manufacturers Association of India (ACMA), he said "the central government will benefit by Rs 4,000 crore and state governments will benefit by Rs 10,000 crore, while your industry (automobile industry) will grow by 22 percent."

Further, he said, the policy would curb pollution as 65 percent of the vehicular pollution is caused by heavy vehicles like trucks and buses and scrapping of these will be done at industrial clusters like Kandla to be set up under the government's ambitious Sagarmala project.

Gadkari also said that he met Finance Minister Arun Jaitley and accordingly the policy was being finalised and would be formulated in such a fashion that those surrendering their old vehicles will get some financial benefits.

"At the time of new purchase, manufacturer will offer some concession, government of India will provide some and there would be value for the scrap," he said.

He said industrial hub for scrapping of vehicles would be set up at Kandla under government's ambitious Sagarmala project, which is a scheme for port-led economic development of the country.

Gadkari has earlier said the policy may provide benefits of Rs 2-3 lakh for every heavy vehicle to be scrapped.

The draft V-VMP policy had earlier proposed to bring vehicles bought on or before March 31, 2005, numbering about 28 million, under its purview.

He has said the benefits of the policy include additional net revenue of over Rs 21,000 crore on account of additional automobile sales, besides crude oil savings of Rs 7,700 crore due to improved fuel efficiency.

Once the policy is finalised, it is estimated to result in domestic steel scrap generation worth Rs 5,500 crore to substitute imported scrap, he has said adding that it would create huge employment.

According to the Ministry, the proposed policy has the potential to reduce vehicular emission by 25-30 percent and save oil consumption by 3.2 billion litres a year.