Retiring Old Vehicles - Gadkari Style ?
Here is how , Road Transport Ministry proposes to remove from the roads, some 28 million vehicles which are 10 year old :
INCENTIVES TO VEHICLE OWNERS :
# Fair value for the vehicle to be scrapped ( needs to be defined precisely )
# Rebate of 50 % of Excise on purchase of New Vehicle ( BS IV compliant )
# Discounts by Auto Manufacturers ( How much ? Who picks up the tab ? )
All of these combined will reduce the cost to buyer by 8 % - 10 %
# Owner to deposit old vehicle documents at Recycling / Shredding Center
# After verification , Owner gets a Certificate and scrap value of the vehicle
# Owner submits Certificate to Dealer while buying new vehicle to get
BENEFITS EXPECTED :
# Reduce vehicular emission by 25%-30%
# Save 3.2 billion litres of oil , every year
# Save Rs 7000 Crore in oil imports , every year
While welcoming this initiative , I request Shri Nitin Gadkariji , to ponder the issues raised in my following earlier blog , when Shri Piyush Goyal had made a similar proposal , sometime back
Surely , no one - least of all , the car owners - would want to get caught between two , very ambitious , but contradictory plans !
After second world war , European economy was in shambles / devastated
It was revived through America's generous help in the form of Marshal Plan
A couple of days back, Shri Piyush Goyal announced intention to replace India's current petrol / diesel vehicles with Electric vehicles , by 2030
Now , consider this :
* India boasts of 200 million vehicles today
* We add some 10 million new vehicles each year
* Today , global electric vehicles number only 6.65 lakhs
* World may reach 30 million electric vehicles by 2030
In light of this , is " PIYUSH PLAN " feasible ?
Let us take up the associated issues , one by one , and explore possible solutions
# TIME FRAME for CHANGE-OVER
Replacing 13.3 million vehicles per year ( starting TO-DAY ! ) to fully change-over 200 million vehicles in 15 years , is NOT possible
Remember , some 10 million vehicles get added each year for replacement / new demand
Way Out :
* Existing vehicle manufacturers to COMMENCE production of electric vehicles by 2020 , giving them 5 years lead time to tool up
* Manufacturers to start TAPERING OFF production of petrol / diesel vehicles from 2020 at the rate of 10 % per year. In 10 years ( by 2030 ) , they must stop all old vehicle production
* Simultaneously , manufacturers to step up electric vehicle production by 10 % per year , so as to achieve 100 % electric vehicle production by 2030
* This time frame will also apply to auto components / ancillary manufacturers ( Batteries etc )
* Complete elimination of petrol / diesel vehicles from the roads to be targeted by 2050
# DISPOSAL OF EXISTING VEHICLES ( 200 million + produced till 2030 )
* Enable / encourage MSME units to carry out " Retro Fitting " of existing vehicles
* Vehicles older than 15 years to be taken off the roads . Encourage MSME to salvage whatever they can from such vehicles ( eg : Steel )
* Provide special incentives to export such " Pre-Used / Reconditioned " to less developed countries
# CHARGING STATIONS
* Existing petrol / diesel filling stations will need to be converted to Electric Charging Stations
* These Charging Stations , themselves , must NOT draw electric power from State / National Power Grids - power which comes from Power Stations using FOSSIL FUEL !
That would only transfer the pollution creation from vehicle engines to fossil-fueled power stations !
My Suggestion :
Use bicycle powered electricity generating device , innovated by Manoj Bhargava ( BillionsinChange )
This pedal operated device generates / stores , with just ONE HOUR of pedaling, enough power to light up 12 lamps of 100 W each for 24 hours , and costs around Rs 10,000/-
Some 25 of such devices are right now under installation in north India
Its construction is so simple that any MSME in smallest town can fabricate it easily , making it possible to get 10 million of these devices manufactured within a year
I am sure , Manoj Bhargava would be more than happy to release its manufacturing drawings on his web site for anyone to register and then download for FREE !
Do we foresee 50 / 60 million unemployed youth to become self-employed by setting up their own mini Charging Stations , on every street corner of every town in India ?
No dependence on Fossil or Solar , yet pure GREEN power around the clock !
Who knows , some owners of electric cars may even install one in their garage to serve dual purpose ( improve health + charge the car ). No doubt , a higher capacity version !
And , may be all GYMS around the country will install one !
Some 32 years ago , India witnessed a Telecom Revolution , riding on the wheels of a million roadside PCOs and a million Cyber Cafes
Enabling launch of a million street-corner Charging Stations has got to be your
TRYST WITH DESTINY
Shri Goyal said :
" We don't need one rupee support from the government
We don't need one rupee investment from the people of India "
But Vehicle Manufacturers say :
" We cannot give away electric cars for FREE ! We need money to run our operations and in advance . At the most , we can consider some sort of " Hire Purchase " scheme , if we can get funds at an interest rate of 5 % and are allowed to charge the buyers , 10 % "
And Banks say :
" We have already advanced car-loans totaling thousands of crores . If we are allowed to transfer the unpaid balances along with the fresh loan amounts , to a " Restructured Loan " bearing a higher interest rate ( and EMI ) , then we can consider "
Government says :
" We don't have funds to build more roads . So, where is the question of financing private purchase / usage of cars ? We would rather build more / better ( concrete ) roads "
Individual says :
" I can hardly make ends meet ! If I must borrow from anyone , I would rather buy a roof over my head . I am already paying huge EMIs for my current car "
I say :
* No questions asked for any CASH deposited into a person's Jan Dhan Bank account
* Create a SPV called , EVFF ( Electric Vehicle Finance Fund )
* Public can invest in this fund but only from their Jan Dhan Bank Accounts deposits
* Interest earned from EVFF to be totally free from personal Income Tax for 10 years
* EVFF will finance Car Loan companies or " Hire Purchase Schemes " of car manufacturers
* Car finance companies will be asked to stop financing of petrol / diesel cars and finance
only electric vehicles
If this is implemented , within 6 months , EVFF will be able to create a Corpus of Rs 10 lakh*crores !
Can you think of a better way of harnessing BLACK money to finance a GREEN future ?
# INCENTIVE FOR CAR MANUFACTURERS AND CAR OWNERS
Shri Goyal says :
" We are trying to make this program self financing by monetizing the savings people have from using cheaper electricity to run cars
We are trying to work out whether we can give the cars for free initially and people can pay back out of the savings from not using petroleum products "
Figuring out which electric car owner saved how much money by not using petrol / diesel vehicle is a very messy issue , to say the least !
People use , from a 5 HP scooter to a 200 HP gas-guzzler car
Some use it for 500 KM per month , whereas others use for 10,000 KM per month
They may use it for self / family or for commercial purpose ( Rickshaw / Taxi / Bus / Truck )
They may use diesel or petrol ( even mixed with kerosene in case of rickshaws )
For 200 million existing vehicles , there could well be , 200 million different / unique ,
* Current amounts ( liters ) monthly fuel usage
* Purchased at differing prices per litter ( depending upon city )
* Amounts paid to Charging Stations ( bound to vary , even within a city )
* All of these leading to different amount of monthly savings
* All the while neglecting the monthly EMI costs incurred !
I am afraid any attempt to compute " Individual Savings " is bound to raise controversies and litigation of unimaginable scale !
And let us not forget that , when vehicle manufacturers switch-over to production of electric vehicles , it won't be just ONE / STANDARD model of same horsepower
There will be hundreds of models of electric vehicles of different designs / capacities / specifications and consuming different amounts of electric power !
My suggestion :
Forget about ,
* Computing of " Individual Savings "
* Giving electric cars " free initially "
* Owners " paying back from savings "
Based on car specifications / assumed average monthly usage etc , figure out and fix
* " Carbon Credits " for each model of electric car manufactured
* Based on Carbon Credits earned , calculate Direct Transfer of Benefit ( DTB ) to electric
car manufacturers based on monthly dispatches of each model
and then transfer these amounts from EVFF , as incentives to manufacturers
As far as incentives to electric car owners is concerned , make tax-exempt , all interest paid by owners for car loans taken , without any ceiling
# GENERAL / GLOBAL INCENTIVES
This game-changing initiative has at its root ,
" SAVE THE WORLD FROM POLLUTION "
This would require " Pulling out all stops " , in the form of unprecedented " Incentives " to :
* Individual Electric Vehicle Owners
* Electric Vehicle Manufacturers ( and " Disincentives " to petrol/diesel manufacturers )
* Manufacturers of Charging Station Equipment ( Bicycle based Devices , for sure )
* Charging Station Operators
* Old Vehicle Retrofitting Units ( MSME )
* Old Vehicle recycling Units ( MSME )
* Old Vehicle Exporting Units
* Roadside Vehicle Repairers
* Vehicle Purchase Finance Companies ( Car loans / Hire Purchase )
* Electric Vehicle Leasing Companies
* Auto Ancillaries of Electric Vehicles
* Distributors / Dealers / Stockists of Electric Vehicles
* Transport Companies using Electric Vehicles ( transporting people or goods )....etc
ALL of these ( and those that I missed out ), must be EXEMPTED from :
* Indirect Taxes ( Excise / Octroi / Import Duty / Sales Tax / GST / Road Taxes etc )
* Direct Taxes ( Personal and Corporate Income Tax / LTCG )
They must also be freed from rigid licensing / registration / incorporation requirements
Dear Piyushji :
Newspaper reports quoted you :
" We are thinking of leading the World rather than following the World
India will be the first country to think of that scale "
There is no doubt you can lead the World , if you do not allow yourself to get paralyzed with the fear of failure !
31 May 2016
www.hemenparekh.in / blogs