New Delhi: On 13th May, Industry body Ficci has suggested a subsidy sharing formula between the Centre and the states to incentivise mandatory replacement of old vehicles in the wake of an NGT order banning over 10-year old diesel vehicles from plying in the Delhi-NCR region.
The chamber suggested that non-fiscal options like creation of low emmission zones by the government may also encourage users to replace old vehicles with new ones, which are more environment-friendly.
The suggestions regarding vehicle replacement policy have been submitted to the National Green Tribunal (NGT), Department of Heavy Industry and Ministry of Environment, Forest and Climate Change.
The experience worldwide is that standalone mandatory vehicle replacement programmes are not very common and without additional incentives (fiscal or otherwise), these measures may become unpopular. Vehicle replacement programmes need to be supported by some form of policy incentives, Ficci noted.
The chamber said there is an option of Central Government directly providing subsidy for replacement of old vehicle. However, since the cost of such a subsidy will be high, 50 percent of it could be borne by the states.
Further, it said the subsidy for replacing old vehicle could be implemented in phases too depending upon the age of the vehicle.
However, any robust programme would require that stringent conditions are imposed and enforced for the new vehicle too, that would replace the old vehicle.
Besides, Ficci suggested that non-fiscal options are also effective in many cases to bring down the pollution levels significantly.
Creating low-emission zones as is the case in several countries like China, Germany etc. Have proved to be very successful.
"Low emission zones are regions in which high-emitting vehicles are either prohibited from operating or charged a fee for entering.
The establishment of such zones can provide strong additional incentives to owners of high-emitting vehicles to take advantage of fiscal subsidies and replace their vehicles," Ficci said.
Citing examples, it said that Beijing in China offered subsidies for the replacement of older vehicles while simultaneously banning those vehicles from travelling in the city center, strongly incentivizing truck owners to take advance of the subsidies and upgrade their vehicles.
In some cases, especially in Europe, fees for entering the low emission zones are differentiated based on vehicle emissions, with higher emitting vehicles being charged more.
