A member of the British Parliament stood up to speak.
"I
conceive, I conceive, I conceive ...," he began, to which Churchill
commented,
"The
honorable member conceived thrice but did not bring forth anything. A woman conceives once and brings
forth a child."
May
be I am being uncharitable , but I cannot stop comparison with our “ Vehicle Scrappage Policy
“ , which is
being “ conceived “ for the past 2 years !
But
finally there appears “ light
at the end of the tunnel “, with Shri Nitin Gadkariji saying :
“
Policy would soon be put up before the cabinet for approval “
Context
:
Highlights :
Ø 9 Million vehicles could be
scrapped by 2020-21, of which 75 % are two-wheelers
Ø 28 million vehicles could go off
the road by 2025
Ø CO2 emissions can be
curbed by 17 % and PM by 24 %
Ø 6 million tons of
steel scrap which India currently imports, can be met locally if old vehicles
are recycled
Ø Potential to save 8
million tonnes of oil even if 50 % of BS-II and BS-III go off road
Ø Incentives some
countries give for scrappage :
# USA
………. $ 4,500
# Germant……$
3,500
# UK ………… $
3,330
# France…….
$ 1,400
Comments :
Ø Shri Satyakam Arya ( MD – Daimler India Commercial
Vehicles / satyakam@daimler.com )
“ Three things that the Govt needs to do
to promote scrappage are :
#
Offer sizable financial incentives
#
Develop resale market for the scrappage certificate for those who don’t
want to replace their scrapped
#
Fix the life-period for a commercial vehicle at 10 years
Ø Shri Ashok Khanna ( Group Head, Auto Finance, HDFC Bank
/ ashok.khanna@hdfcbank.com )
“ A comprehensive
scrappage policy will result in reduction in costs, save foreign exchange and
increase revenues in the long term
“ The policy could
be a win – win for all , as the consumer would benefit from the scrap value,
GST savings , and
discounts, while a dealer
would gain from demand for new vehicles. For a vehicle maker, recycled metals
would
be available at a
cheaper rate , and the government could save forex because of lower imports of
these raw
materials as well as
get tax revenue from new vehicle sales “
A personal car may be
scrapped after 15 years and a two-wheeler after 10 years. In case of commercial
vehicles
, the end of life at
7-8 years or certain kilometers driven “
Ø Shri Ashish Kale
( President , Automobile Deler Association of India – FADA – fada@fada.in )
“ ….. since it would
be a voluntary policy, there should be financial incentives equal to at least 10
% of the new vehicle to the owner to make the scheme successful
The focus should be
more on financial incentives rather than disincentives . If a 10 % kind of benefit is
extended, we see a lot of consumers taking advantage of the scheme “
=====================================================================================
So , everybody ( including the vehicle-owners ) want the
government to provide a 10 % incentive ( discount on sale price ), for scrapping old petrol /
diesel vehicles and replace the same
with new ( less polluting BS VI compliant but petrol / Diesel ? ) vehicle
What are the implications if this “ 10 % Incentive “ suggestion gets accepted by the government ?
Take a look at the
following tabulations ( assuming current sale prices remain unchanged till 2025 ) :
===========================================================================
[
A ] …………… Current Sale prices of Petrol / Diesel vehicles and Incentive amounts
|
Type of Vehicle
|
Ave . Current Sale Price ( Rs Lakh )
|
Incentive @ 10 % ( Rs Lakh )
|
|
2 Wheeler
|
1.5
|
0.15
|
|
Passenger Vehicles
|
8.0
|
0.80
|
|
Commercial Vehicle
|
15.0
|
1.5
|
[
B ]……………No of Old Vehicles to be scrapped / replaced with new ones
|
By Year
|
Total ( Lakh )
|
2 Wheeler
|
Passenger Vehicles
|
Commercial Vehicles
|
|
2020 - 21
|
90 ( 9 million )
|
@ 75 % of the total = 67.5 Lakh
|
@ 20 % of the total = 18 Lakh
|
@ 5 % of the total = 4.5 Lakh
|
|
2024-25
|
280 ( 28 million )
|
@ 50 % of the total = 140 Lakh
|
@ 40 % of the total = 112 Lakh
|
@ 10 % of the total = 28 Lakh
|
[
C ]……………Incentive Burden for Government
|
Till Year
|
For 2 Wheelers ( Rs crore )
|
For Passenger Vehicles ( Rs Crore )
|
For Commercial Vehicles ( Rs Crore )
|
Total ( Rs Crore )
|
|
2020-21
|
67.5 Lakh x 0.15
Lakh = Rs 1,000 Cr
|
18 Lakh x 0.8 Lakh =
Rs 1,400 Cr
|
4.5 lakh x 1.5 Lakh
= Rs 675 Cr
|
3,075
|
|
2024-25
|
140 lakh x 0.15 Lakh
= Rs 2,100 Cr
|
112 Lakh x 0.8 Lakh
= Rs 8,960 Cr
|
28 Lakh x 1.5 lakh =
Rs 4,200 Cr
|
15,260
|
================================================================================
Scrapping
28 million vehicles in 5 years = 5.6
million vehicles EACH YEAR
By
now , we probably have on our roads , 280 million vehicles { Petrol / Diesel }
Even
if we are able to step up the scrappage at 10 million vehicles per year, it
will take 30 – 40 years to scrap ALL existing petrol / diesel vehicles
But,
it will not help solve much of our POLLUTION problem unless these old petrol /
diesel vehicles get replaced with ELECTRIC VEHICLES ( zero pollution ),
which are 50 % to 500 % more expensive than the petrol / diesel vehicles
A
10 % discount for EV, will not enthuse existing vehicle owners to replace
theirs with EVs. They will continue
to buy petrol / diesel vehicles at the discounted rates !
Hence,
a financial incentive ( of 10 % ) – although devised to encourage OLD VEHICLE
SCRAPPAGE, - may not serve the purpose of switch-over to EVs
And
, it will be a bad idea,
to offer 25 % discount for purchase of new EVs !
What
we need is to impose a FINANCIAL DIS-INCENTIVE , on ALL vehicle
owners, as suggested in :
Transport : an Integrated
Logistic Plan ? [ 20 Nov 2018 ]
Pigovian Tax for
Polluters ? [
03 Apr 2019 ]
National Clean Air Tax ?
– a Pigovian tax ? [ 11 Jan 2019 ]
As far as incentives to the VEHICLE SCRAPPAGE INDUSTRY is
concerned, I hope Shri Gadkariji will incorporate my following specific suggestions ( sent as E Mails ), in the
VEHICLE SCRAPPAGE POLICY, about to be born :
Rename
it , “ Vehicle Recycle Policy “
[ 08 Aug 2018 ]
PIYUSH PLAN ? ……………………………………………….
[ 27 Mar 2016 ]
Retiring Old Vehicles - Gadkari Style ? ……….
……[ 30 May 2016 ]
Young or Old ? …………………………………………………….[ 27 Aug 2016 ]
From OLD to NEW ? No , go NEWER ! ………………[ 22 Sept 2016 ]
Building Castles in the Air ? …………………………………[ 12 Mar 2017 ]
Best out of a Bad Bargain ? ……………………………………[ 29 Mar 2017 ]
Car Grave-Yard of World ? …………………………… [ 14 Feb 2018 ]
One door closes ; Another
opens …………………………..[ 27 Feb 2018 ]
Mahindra Accelo : Saluting a pioneer ………………………..[ 19 June 2018 ]