29-August-2024-Special-Article

VOLUNTARY VEHICLE-FLEET MODERNIZATION PROGRAM (V-VMP)

The Vehicle Scrapping Policy 2021, also known as the Voluntary Vehicle-Fleet Modernization Program (V-VMP), is a recent initiative by the Indian government aimed at modernizing the vehicle fleet on Indian roads.

This policy encourages the scrapping of old and unfit vehicles through various incentives, with the ultimate goal of reducing pollution, improving road safety, and promoting a circular economy.

Recent Developments

Scrappage Discounts

• Discount Offers: Auto manufacturers have introduced discounts ranging from 1.5% to 3% or up to Rs 25,000 on new vehicles when customers present a scrappage certificate from an old vehicle.
• Duration of Discounts: Discounts for commercial vehicles will be available for two years, while passenger vehicle discounts will last for one year.
• State Government Incentives: Some state governments offer significant discounts on road taxes for recycled vehicles, ranging between 25% and 30%.

Discount Replacements

• Old Exchange Discounts: Previously, customers received discounts when exchanging their old vehicles with car dealers. This has now been replaced by the scrappage certificate-based discount.

Voluntary Vehicle-Fleet Modernization Program (V-VMP)

The V-VMP is designed to remove old and unfit vehicles from the roads. It prevents the re-registration of vehicles that are over 20 years old for cars and 15 years old for commercial vehicles.

Recent Developments

• Agreement on Discounts: Automakers are offering incentives of up to 3% off or Rs 25,000 for purchasing new vehicles after scrapping the old ones.
• State Incentives: Several state governments provide discounts on road tax for vehicles scrapped under this policy.

Categorization of Vehicles

• Private Vehicles: Must undergo a fitness test after 15 years. If passed, registration can be renewed for 5 years.
• Commercial Vehicles: Subject to fitness tests every two years for the first 8 years and annually thereafter until the 15-year mark.
• Government Vehicles: All state and central government vehicles over 15 years old will be scrapped.
• Vintage Vehicles: Excluded from the scrappage policy due to their typically better maintenance and less frequent use.

Benefits of V-VMP

• Pollution Reduction: Scrapping approximately 1 crore old vehicles will reduce vehicular emissions by 15-20%, helping to lower overall pollution levels.
• Industry Formalization: The policy aims to formalize the scrappage industry, making it more transparent and environmentally friendly.
• Boost to New Vehicle Demand: Replacing old vehicles with new ones will stimulate demand in the automobile sector.
• Enhanced Road Safety: The policy encourages the adoption of safer, technologically advanced vehicles with better features.
• Promotion of Circular Economy: It will enhance recycling efforts, create jobs in the recycling sector, and improve waste and recycling management through research and development.
• Improved Fuel Efficiency: New vehicles are expected to have better fuel efficiency and reduced nitrogen oxide emissions.

Incentives and Disincentives

Incentives

• Discounts on New Vehicles: Scrappage centers offer a scrap value of 4-6% of a new vehicle’s ex-showroom price. An advisory encourages a 5% discount for new vehicle purchases with a scrappage certificate.
• Tax Concessions: State governments can offer up to 25% reduction in motor vehicle tax for non-transport vehicles and up to 15% for transport vehicles.
• Waived Registration Fees: Registration fees for new vehicles are waived when an old vehicle is scrapped.

Disincentives

• Higher Fitness Test Fees: Older commercial vehicles face higher fees for fitness tests and certificates.
• Increased Registration Renewal Fees: Private vehicles older than 15 years incur higher renewal fees.
• Green Cess: An additional green cess of 10-15% is levied on older vehicles.

Circular Economy

The circular economy focuses on maintaining products and materials in use for as long as possible through various processes like recycling, reuse, and refurbishment.

Benefits

• Environmental Impact: Reduces climate change, biodiversity loss, waste, and pollution by decoupling economic activity from finite resource consumption.
• Principles:
• Eliminate Waste and Pollution
• Circulate Products and Materials
• Regenerate Nature

India’s Initiatives: Rules for battery waste, plastic waste, e-waste management, and extended producer responsibility aim to support circular economy principles.

Conclusion

The Vehicle Scrapping Policy 2021 is a strategic initiative to modernize India’s vehicle fleet by incentivizing the replacement of old, polluting vehicles with new, efficient ones. By promoting a circular economy and supporting environmental sustainability, the V-VMP aims to enhance road safety, reduce emissions, and stimulate economic growth in the automotive sector.

Mains question:

1. “Evaluate the potential impacts of the Voluntary Vehicle-Fleet Modernization Program (V-VMP) on India’s environmental sustainability and economic growth. How does it contribute to the principles of a circular economy?” (150 WORDS)