After 'green tax' approval, govt may put vehicle scrap policy on hold

The Ministry of Road Transport and Highways is of the view that the ecosystem is not in place for bringing in a proper policy at the moment
After Union Highways Minister Nitin Gadkari announced a “green tax” on older vehicles, the Union government intends to announce more such policy initiatives as opposed to a full-fledged vehicle scrapping policy as envisaged earlier.

“The announcement of green tax is a step towards the scrappage policy,” an official told Business Standard.

The Ministry of Road Transport and Highways is of the view that the ecosystem is not in place for bringing in a proper policy at the moment.

“We don’t have scrappage units, neither do we have the ecosystem to dispose of older vehicles in an environment friendly manner,” another official said.

He added there is a possibility that there may not be a vehicle scrappage policy and these announcements or these guidelines will serve as a road map for discarding vehicles.

Gadkari recently announced imposition of “green tax” on old, polluting vehicles. The proposal will go to the states for consultation before it is formally notified.

According to the proposal, green tax will be imposed on transport vehicles older than eight years at the time of renewal of the fitness certificate — at the rate of 10-25 per cent of road tax. Personal vehicles will also be charged the same levy at the time of renewal of registration certification after 15 years.


Public transport vehicles, such as city buses, will be charged a lower green tax.

In the case of vehicles being registered in highly polluted cities, a higher green tax (50 per cent of road tax) and a differential tax, depending on the fuel (petrol/diesel) variant and type of vehicle, will be charged.

Hybrids, electric vehicles, and alternative fuels — such as compressed natural gas, ethanol, and liquefied petroleum gas — will be exempted, along with farm vehicles, such as tractors, harvesters, and tillers.

The revenue collected from this will be kept in a separate account to be used for tackling pollution, and for states to set up facilities for emission monitoring, said an official statement.

Gadkari also approved the policy of deregistration and scrapping vehicles owned by government departments and public sector undertakings above 15 years old. The proposal is to be notified and will come into effect from April 1, 2022.

It is estimated that commercial vehicles, which constitute 5 per cent of the vehicle fleet, contribute 65-70 per cent to total vehicular pollution.

The older fleet, typically manufactured before 2000, makes up for less than 1 per cent of the fleet, but contributes to 15 per cent of the vehicular pollution. These older vehicles pollute 10-25 times more than newer vehicles.

On July 26, 2019, the government had proposed amendments to motor vehicle norms to allow scrapping of vehicles older than 15 years in a bid to spur adoption of electrical vehicles.

In May 2016, the government had floated a draft Voluntary Vehicle Fleet Modernisation Programme that proposed to take 28 million decade-old vehicles off the road.



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