AgenciesMUMBAI: The automobile industry welcomed the ‘Green Tax’ proposed on old vehicles by road transport and highways minister Nitin Gadkari on Monday, but transporters raised objections against the proposed tax as it may lead to increased costs for them.
According to the proposal, transport vehicles older than eight years could be charged a green tax at the rate of 10-25% of road tax at the time of renewal of fitness certificate. For personal vehicles, the tax will be levied at the time of renewal of registration certificate after 15 years. The proposal will now go to states for consultation before it is formally notified.
The automobile industry has long been lobbying for an incentive-based scrappage policy to take older, more-polluting vehicles off the roads and promote the sale of new vehicles, thus generating demand for the industry. Industry executives called the proposed green tax a step in the right direction as it will disincentivise people from using older vehicles.
“Along with this policy, the government must also institute a much more effective way of certifying the fitness of vehicles, both passenger as well as commercial,” said RC Bhargava, chairman of the country’s largest automaker Maruti Suzuki. “Currently, I believe fitness certificates are only required for commercial vehicles and not for passenger vehicles. But there's no reason why passenger vehicles should not also be certified for fitness every two years or three years.”
Vehicles must be inspected both for the pollution they cause and their safety, he said.
“My only worry is that at the end of 15 years, if the amount (to be paid as green tax) is not large, it will not be much of a disincentive and people may continue to use polluting and unsafe vehicles,” he said.
If implemented correctly, the green tax will also be a more permanent solution than a temporary incentive-based scrappage scheme, automakers said. Examples from other countries have shown that vehicles sales tend to drop again after incentives on scrappage are eventually repealed.
“The main thing is that this will promote better technology vehicles and get polluting ones off the roads. And since it will be for a long term, it is much appreciated,” said Naveen Soni, senior VP, sales and customer service, Toyota Kirloskar Motor.
However, transporters have objected to the proposed tax as it will force them to retire their vehicles sooner than they are used to without any incentive.
“It is difficult to understand the rationale and basis of an eight-year cut off without having any scientific method of inspection in place. Merely imposing a green tax is not the way to check air pollution,” said SP Singh, a senior fellow at the Indian Foundation of Transport Research and Training (IFTRT), a lobby of transporters. "This latest proposal of putting up a green tax seems to be under pressure from the auto industry lobby."
The policy in its proposed form will also be partly moot the national capital region (NCR) where registration certificate of older cars cannot be renewed. The National Green Tribunal in 2015 ordered to ban petrol cars older than 15 years and diesel cars older than 10 years from plying in Delhi-NCR.
According to the proposal, transport vehicles older than eight years could be charged a green tax at the rate of 10-25% of road tax at the time of renewal of fitness certificate. For personal vehicles, the tax will be levied at the time of renewal of registration certificate after 15 years. The proposal will now go to states for consultation before it is formally notified.
The automobile industry has long been lobbying for an incentive-based scrappage policy to take older, more-polluting vehicles off the roads and promote the sale of new vehicles, thus generating demand for the industry. Industry executives called the proposed green tax a step in the right direction as it will disincentivise people from using older vehicles.
“Along with this policy, the government must also institute a much more effective way of certifying the fitness of vehicles, both passenger as well as commercial,” said RC Bhargava, chairman of the country’s largest automaker Maruti Suzuki. “Currently, I believe fitness certificates are only required for commercial vehicles and not for passenger vehicles. But there's no reason why passenger vehicles should not also be certified for fitness every two years or three years.”
Vehicles must be inspected both for the pollution they cause and their safety, he said.
“My only worry is that at the end of 15 years, if the amount (to be paid as green tax) is not large, it will not be much of a disincentive and people may continue to use polluting and unsafe vehicles,” he said.
If implemented correctly, the green tax will also be a more permanent solution than a temporary incentive-based scrappage scheme, automakers said. Examples from other countries have shown that vehicles sales tend to drop again after incentives on scrappage are eventually repealed.
“The main thing is that this will promote better technology vehicles and get polluting ones off the roads. And since it will be for a long term, it is much appreciated,” said Naveen Soni, senior VP, sales and customer service, Toyota Kirloskar Motor.
However, transporters have objected to the proposed tax as it will force them to retire their vehicles sooner than they are used to without any incentive.
“It is difficult to understand the rationale and basis of an eight-year cut off without having any scientific method of inspection in place. Merely imposing a green tax is not the way to check air pollution,” said SP Singh, a senior fellow at the Indian Foundation of Transport Research and Training (IFTRT), a lobby of transporters. "This latest proposal of putting up a green tax seems to be under pressure from the auto industry lobby."
The policy in its proposed form will also be partly moot the national capital region (NCR) where registration certificate of older cars cannot be renewed. The National Green Tribunal in 2015 ordered to ban petrol cars older than 15 years and diesel cars older than 10 years from plying in Delhi-NCR.
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