India Ponders Car Scrappage Plan

India's transport minister has proposed a plan that would pay owners of old cars 25,000-30,000 rupees ($375-$450) to scrap and replace their vehicles. Large commercial vehicles could qualify for incentives of as much as 150,000 rupees ($2,300).

Transport Minister Nitish Gadkari also envisions India setting up about 10 recycling facilities to accept scrapped vehicles, including imported used cars from other markets. He says the overall plan would create jobs while removing older cars with relatively high emissions and few safety features.

The main scheme is patterned after the scrappage plan launched in the U.K. in 2009 to replace cars that were at least 10 years old. The 800 million ($1.3 billion) program, which was co-funded by the government and carmakers, resulted in some 392,000 sales.

Critics say the Indian version could cost the government five times as much. They note the country has some 3.6 million cars and 1.7 million trucks on the road that are at least 15 years old and many more that would be covered by the plan's intended 10-year-old eligibility requirement.