SIAM seeks to axe ageing fleet

MUMBAI: Among the many suggestions to the Centre in the run-up to Budget, the Society of Indian Automobile Manufacturers (SIAM) has taken up the contentious issue of phasing out old vehicles.

SIAM has suggested a comprehensive, three-year scheme for phasing out private vehicles over 15 years old and commercial vehicles over 10 years old across the seven major cities of Delhi, Mumbai, Kolkata, Chennai, Bangalore, Hyderabad and Ahemedabad.

So, while the government has been requested to offer zero excise duty and sales tax levy for owners of old vehicles who choose to convert to new vehicles in the first year, these incentives ought to be halved in the second year.

However, if owners of old vehicles do not avail of the scheme in the first two years, their vehicles ought to be retired without any incentives in the third year of this vehicles replacement programme.

SIAM has also suggested that rate of road tax and the premium on motor vehicle insurance should both be linked to the age of the vehicle.

This will also discourage plying of very old vehicles on roads.

SIAM’s concern stems from alarming number of old vehicles which continue to be on the roads of our major cities.

For example, Delhi has the largest number of vehicles - both private and commercial - that are more than 10 years old. This, despite the fact that old taxies, trucks, buses and three-wheelers in the Capital have already been phased out. According to SIAM data, there are 11.04 lakh such cars and two-wheelers still plying on Delhi’s roads. Mumbai comes a distant second, with less than half of Delhi’s pollutants on the road at 4.27 lakh, followed by Chennai (3.83 lakh), Hyderabad (3.74 lakh), Bangalore (3.37 lakh), Kolkata (3.05 lakh) and Ahmedabad (1.67 lakh).

SIAM has given several reasons for proposing this comprehensive fleet modernisation programme. Not only has the automobile industry made significant investments to produce safer and increasingly environment friendly vehicles, the benefits of such an investment are not reflected in the ambient air quality due to the large number of old and ill-maintained polluting vehicles.

And adopting the carrot-and-stick approach, SIAM has also submitted detailed calculations to show how the government would actually earn revenue by offering an incentive-based modernisation package. If all goes well, the government could be the net gainer by as much as Rs 6,516 crore, earning the maximum Rs 1,428 crore from Delhi, followed by Rs 1,406 crore from Mumbai in the process.