Scrapping 97 Lakh Vehicles Could Yield ₹40,000 Crore GST, Says Nitin Gadkari

Union Minister for Road Transport and Highways Nitin Gadkari has made a strong pitch to India’s automobile industry, outlining the far-reaching benefits of the government’s vehicle scrapping policy. Speaking at the ACMA Annual Session 2025, Gadkari stated that if India successfully scraps 97 lakh unfit and polluting vehicles, the country could generate ₹40,000 crore in Goods and Services Tax (GST) revenue, create 70 lakh jobs, and significantly strengthen its automobile sector.

Gadkari stressed that this initiative would not only enhance government finances but also drive cleaner mobility, reduce pollution, and support India’s ambition of becoming the world’s number one automobile industry within five years.

Gadkari’s Bold Pitch: GST, Jobs, and Growth

According to Gadkari, scrapping 97 lakh vehicles across the country could unlock:

• ₹40,000 crore in GST revenue for the government

• 70 lakh new jobs across the scrappage ecosystem and auto sector

• A strong boost to India’s automobile industry, helping it compete globally

He emphasized that this is not just an economic measure but a multipronged solution targeting environmental, industrial, and employment challenges.

The Current Status of Vehicle Scrapping

Despite the ambitious targets, Gadkari acknowledged that progress has so far been modest.

• 3 lakh vehicles scrapped in total until August 2025

• Of these, 1.41 lakh vehicles were government-owned

• Average scrapping rate: 16,830 vehicles per month

• ₹2,700 crore invested by private sector players in building scrappage infrastructure

The slow pace highlights the need for stronger incentives, industry participation, and awareness campaigns to accelerate implementation.

Also Read: PM Modi Inaugurates ₹8,070 Crore Bairabi-Sairang Rail Line in Mizoram

The Vehicle Scrapping Policy

India’s Vehicle Scrapping Policy, also known as the Voluntary Vehicle Fleet Modernization Program (V-VMP), is aimed at phasing out old, unsafe, and polluting vehicles. The policy emphasizes environmentally friendly dismantling methods and recycling of materials, with a vision to:

• Improve road safety standards

• Lower vehicular emissions

• Create a circular economy in automobile manufacturing

Gadkari’s Appeal to Automakers: Offer Discounts

In his address, Gadkari urged automobile manufacturers to take a proactive role by incentivizing customers. He suggested that companies should provide a minimum 5% discount to buyers presenting a valid scrappage certificate when purchasing a new vehicle.

“It is not charity, because it is going to increase the demand,” he said.

According to him, such incentives will establish a cycle of scrapping and replacement, keeping demand in the automobile sector robust and sustainable.

Why the Scrappage Policy Matters

The scrappage initiative carries broad economic and environmental benefits:

1. Cheaper Auto Components: By recycling materials like steel and aluminium, the cost of automobile parts could fall by up to 25%.

2. Cleaner Air: Removing 97 lakh unfit vehicles will reduce emissions and fuel consumption.

3. Safer Roads: Old, unsafe vehicles will be phased out, lowering accident risks.

4. Stronger Supply Chain: Recycled materials re-entering production will strengthen manufacturing sustainability.

India’s Global Automobile Ambitions

Gadkari also highlighted India’s growth potential in the automobile sector.

• Current size of India’s auto industry: ₹22 lakh crore

• China’s auto industry size: ₹47 lakh crore

• US auto industry size: ₹78 lakh crore

“I am very much confident that we will make India’s automobile industry number one in the world within next five years,” Gadkari declared.

The scrappage program is seen as a catalyst to help India expand production capacity and strengthen competitiveness on the global stage.

The Fuel Import Challenge

A major issue Gadkari highlighted was India’s heavy dependence on fossil fuels.

• Annual spending on fuel imports: ₹22 lakh crore

• Linked environmental impact: rising pollution levels

• National security concern: vulnerability to global fuel price volatility

Gadkari stressed that reducing this dependence is essential for both economic sustainability and energy security.

Push for Ethanol and Alternative Fuels

To cut fuel imports and reduce pollution, Gadkari outlined a clear strategy focused on ethanol.

• Scale up ethanol production from sugarcane, broken rice, and other crops

• Increase ethanol blending in petrol from E20 to E27

• Cited Brazil’s model, where petrol with 27% ethanol blending has been in use for 49 years

The minister explained that India is already moving toward E27 fuel adoption, with testing underway.

Road Safety: A Parallel Concern

In addition to scrappage and fuel imports, Gadkari highlighted India’s road safety crisis.

• Accidents in 2023: 5 lakh

• Deaths in 2023: 1.8 lakh

• Two-thirds of victims were in the 18–34 age group

By addressing unsafe vehicles and promoting safer technology adoption, the scrappage policy could also contribute to reducing these alarming statistics.

Energy Security in a Global Context

Gadkari linked India’s vehicle scrappage and ethanol policies to broader energy security concerns.

“Energy security from global point of view is very very important… now global instability is there,” he remarked.

According to him, reducing fossil fuel dependence and strengthening domestic energy alternatives is a critical step in shielding India from external shocks.

Next Steps

The Automotive Research Association of India (ARAI) is currently testing the compatibility of E27 fuel with vehicles. Once testing is cleared, the proposal will move to the petroleum ministry and subsequently to the Union Cabinet for approval.

If paired with large-scale implementation of the scrappage drive, India could see:

• Stronger demand in the automobile industry

• Reduced import burden

• Improved environmental sustainability

• New opportunities for job creation

Conclusion

Nitin Gadkari’s speech at the ACMA Annual Session 2025 was a call to action for the automobile sector. He outlined the immense potential of the scrappage policy: ₹40,000 crore in GST revenue, 70 lakh jobs, lower costs for automakers, and cleaner air for citizens.

While the current pace of scrapping remains slow—only 3 lakh vehicles scrapped so far—the minister’s roadmap emphasizes industry participation, customer incentives, and alignment with alternative fuels like ethanol.

If implemented effectively, this strategy could transform India’s automobile landscape, cut fossil fuel dependence, and move the nation closer to Gadkari’s bold vision of becoming the world’s leading automobile industry within five years.

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