The replacement vehicle needs to be BS-IV compliant, which is going to be rolled out nationwide by April 2017.
Looking to push nearly 28 million over 11-year-old polluting vehicles off-roads, the government has proposed incentives worth 8-12 per cent of the cost of a new vehicle for surrendering the old ones.
The benefits under the proposed voluntary vehicle modernisation policy will come in three forms -- scrap value from the old vehicle, a special discount by the automobile manufacturer and a partial excise duty exemption.
Inviting comments within a fortnight from general public and all stakeholders on the draft policy, the Ministry of Road Transport and Highways said the 'Voluntary Vehicle Fleet Modernization Plan (V-VMP)' will be applicable to the vehicles bought on or before March 31, 2005.
"The total potential vehicles to be replaced with this definition are nearly 28 million," it said.
Under the scheme, people surrendering their old vehicles and buying new one are likely to receive three benefits amounting to 8-12 per cent of total cost of the new vehicle, the Ministry said.
"To ensure that the resultant impact is beneficial to the environment, the replacement vehicle needs to be BS-IV compliant, which is going to be rolled out nation-wide by April 2017.
The draft policy said that it is expected to boost sales of automobile manufacturers leading to higher production capacity utilisation and the automobile manufacturers would support the government in this initiative "financially by giving special discounts to customers buying vehicles under this scheme".
According to Road Transport and Highways Minister Nitin Gadkari, the policy will boost automobile industry turnover over four-times to Rs 20 lakh crore in the next five years.
Subject to approval from Ministry of Finance, it has been proposed that vehicles bought under this scheme may get up to 50 per cent excise duty relief based on old vehicle and replacement vehicle category.
In addition, SRTU (state road transport undertaking) buses may be given complete excise exemption to ensure higher participation and modernise state's bus fleet.
