New Delhi: The proposed vehicle scrap policy for mandatory disposal of more than 20 years old commercial vehicles will go for the Cabinet nod in a month and once brought in, will result in additional flow of Rs 10,000 crore into government coffers, Union minister Nitin Gadkari said.

The much-awaited policy was given 'in-principle' approval at a high-level inter-ministerial meeting at the PMO to pave way for scrapping of 20 years old commercial vehicles (CVs) from April 1, 2020.

"Old commercial vehicles are responsible for 65 per cent of the vehicular pollution.

The policy to scrap these has got nod at a Secretary-level meeting at the PMO.

Now stakeholders consultation will be done in a fortnight and it will go to the Cabinet in about a month's time," Road Transport, Highways, Shipping, Water Resources and Ganga Rejuvenation Minister Nitin Gadkari told PTI in an interview.

After the Cabinet nod this will be placed before the GST Council as the concessions that "we are liable to give to buyers of new vehicles in lieu of the scrapped ones" is linked to state governments and the Government of India, the minister said.

The GST Council will decide the amount of concession that the Centre and the states will offer in this regard.

"I am not in a position to say the exact benefits to the buyer of such vehicle at this moment" but assess that the benefit of buying one in place of scrapped one could be anything ranging between 15 to 20 per cent, he said.

"The policy once it comes into force will result in increase in Rs 10,000 crore revenue to the government. Production of new vehicles will jump by 22 per cent. The automobile industry at present is a Rs 4.5 lakh crore industry in India, will swell to a Rs 20 lakh crore industry," the minister claimed.

Earlier, an official requesting anonymity had said that the GST Council will be requested to reduce rate to 18 per cent from 28 per cent for a new commercial vehicle that would be purchased in place of a scrapped vehicle.

Gadkari said once the policy comes into force, various vehicle scrapping centres would be set by the Centre as well as states to scrap vehicles and various clusters would be set up near ports like Kandla under ambitious Rs 12 lakh crore Sagarmala initiative.

"Such automobile clusters will be designed to not only scrap commercial vehicles from the country but India could be a hub for global vehicle scrap.

These clusters will recycle separately various vehicle components like steel, aluminium, copper, plastic etc and automobile part prices are bound to come down by 30 to 40 per cent," he said.

If the automobile parts will be cheaper than India could produce automobiles at a very competitive rates, Gadkari said and added that India already is manufacturing major global brands.

He said automobile industry which is of the size of Rs 4.5 lakh crore exports components and vehicles worth Rs 1.45 lakh crore which was bound to swell significantly while there will be a boost to "Made in India" and "Make in India" drive of the Prime Minister Narendra Modi.

Asked why was it decided to increase the life of vehicles to be scrapped from earlier 15 years to present proposed 20 years, the minister said the decision was taken to protect the interest of people who would have taken loans to buy commercial vehicles.