The government expects these measures to reduce the value of new vehicles by 15 percent on average
The cabinet is soon expected to approve a proposal to take thousands of polluting commercial vehicles (CVs) off the road by limiting their retirement age to 20 years.
Top government officials told The Economic Times that the retirement age rule will come into effect in 2020. This will help push demand for new vehicles up and curb emissions.
Over 7 lakh commercial vehicles registered before 2000 are currently running on Indian roads. The government has proposed making the owners of these vehicles eligible for incentives if they replace them with new ones.
Indian cities have been faring badly on air quality indices for quite some time and a major reason for that is vehicular emissions. It is known to cause stunting among children and respiratory diseases.
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Incentives for buying new vehicles include a reduction in GST at the time of purchase, a fair value for the scrap and various discounts from manufacturers.
The government expects these measures to reduce the value of new vehicles by 15 percent on average.
The steel ministry will set up scrapping centres for the old vehicles and people replacing their cars will have to hand over the vehicle documents at the centres.
"After verification, the owner will get a certificate and the price for the scrap. He has to provide the certificate to the dealer while buying the new vehicle to avail the discount and tax incentive," an official told the paper.
The proposal will go to the GST Council after the Cabinet approves it, in order to determine the favorability of reducing the tax rate on replaced vehicles.
The first draft for the policy had been released in 2016 by the Road Transport and Highways Ministry and proposed a life of 15 years for commercial vehicles. It was later decided by a committee of secretaries that it should be 20 years.