Vehicle Modernization Scheme Features and Benefits

By | December 11, 2017

Vehicle Modernization India

In an initiative to reduce pollution from vehicles on the road, the Central Government has introduced Vehicle Modernization Scheme. Under the scheme, the government encourages people to give up old vehicles that cause more pollution and provides incentives to buy new vehicles. The first phase of the scheme has already been rolled out.

Vehicle fleet modernization scheme

Pollution due to vehicles running on the road, specifically much older vehicles, is a matter of much concern and needs immediate action to check it. There are about 11.2 lakh medium and heavy vehicles which are older than 15 years and contribute to 34% pollution. The scheme is a move towards controlling pollution.


Objectives of the Scheme

  • To control air pollution in the country due to carbon emission from the vehicles running on the road.
  • The scheme aims to reduce the number of old vehicles on the road in order to reduce emissions. Priority is given to get old styled fuel-guzzling and polluting trucks off the roads.
  • The first phase of the scheme focuses on incentivizes buyers of new commercial vehicles.
  • To facilitate the environment for the scrapping of old vehicles.

Features of the Scheme

  • The first phase of the scheme will provide incentives for commercially used vehicles, specifically heavy load vehicles such as bus, trucks, tempo etc. Currently, it won’t include personal vehicles as well as two-wheelers.
  • The vehicles bought before 31st March 2005 and the vehicles with emission level before BS IV are considered for the incentives under the scheme.
  • The scheme will provide discounts and tax benefits on new buy. As the automobile companies can’t reduce the price of their vehicles, so they will be directed to stop the regular discount they offer and provide the discount on vehicles under the scheme.
  • The Scheme will work towards creating an environment in the country which will encourage people to get rid of old polluting vehicles.
  • The government is to issue tradable certificates. This will help if the owner of the vehicle changes. The last owner of the vehicle can be provided the incentive to scrap the vehicles; whereas the first owner of the vehicle can be offered benefits to buy a new vehicle.
  • The scheme will provide full exemption from excise duty for the state transport buses.

Benefits of the Scheme

  • On average, the new buyers will get 10 to 12% discount on the purchase of the vehicles.
  • As an incentive to scrap the old vehicle, they will be provided 50% discount on the exemption from excise duty.
  • It is estimated that the implementation of the scheme would help 17% reduction in emission of carbon monoxide and 18% reduction in emission of HCNOx.
  • It’s a win-win situation for the consumers as well as manufacturers. The consumer will get the good discount, whereas the manufacturers will be able to sell more vehicles.

Challenges for the Scheme

It would generate steel scrap of worth Rs 11,500 crore every year; it needs proper infrastructure to handle the scrap and recycle it. There is a debate also that rather than getting rid of the vehicles, the scheme could have provided the incentive to replace the engine of the vehicles.

Vehicle Modernization scheme will help control air pollution which is a need of the time. Reduction in the level of air pollution will also help improve public health.

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