Union minister Nitin Gadkari on Friday made a sweeping pitch to the automobile industry: India could unlock Rs 40,000 crore in Goods and Services Tax (GST) if all of the country’s 97 lakh unfit and polluting vehicles were scrapped.
Speaking at the ACMA Annual Session 2025, as per the PTI report, Gadkari said that the massive cleanup drive would not just boost government revenues but also create 70 lakh jobs and strengthen India’s push to become the world’s number one automobile industry within five years.
Where the scrapping stands today
So far, progress has been modest.
- Up to August 2025, only 3 lakh vehicles have been scrapped, out of which 1.41 lakh were government-owned.
- On average, 16,830 vehicles are being scrapped monthly.
- The private sector has invested Rs 2,700 crore in building the ecosystem.
India’s Vehicle Scrapping Policy, also known as the Voluntary Vehicle Fleet Modernization Program (V-VMP), is designed to phase out old, unsafe and polluting vehicles in an environmentally friendly way.
Gadkari’s message to the auto sector: offer a scrappage discount
Gadkari, as per the PTI report, urged automobile manufacturers to incentivise scrapping by offering at least 5 percent discount to customers presenting a scrappage certificate while buying a new vehicle.
“It is not charity, because it is going to increase the demand,” he said, noting that the cycle of scrapping and replacement could keep the industry’s demand pipeline robust.
Why it matters: cheaper components, cleaner air
According to Gadkari, effective implementation of the scrappage policy could reduce the cost of automobile components by 25 percent, as recycled steel, aluminium, and other materials are fed back into the supply chain.
At the same time, phasing out 97 lakh unfit vehicles would cut emissions, reduce fuel consumption, and improve road safety standards.
India’s global auto ambitions
The minister was emphatic about India’s future.
- Current size of the automobile industry: Rs 22 lakh crore
- China: Rs 47 lakh crore
- US: Rs 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 fuel import challenge
India currently spends Rs 22 lakh crore annually on fossil fuel imports, a drain Gadkari called unsustainable. Pollution linked to these imports adds another layer of urgency.
To cut reliance, he pushed for diversification of agriculture into energy:
- Scaling up ethanol production from sugarcane, broken rice, and other crops.
- Higher ethanol blending in petrol, with India already moving from E20 to E27.
- Brazil, he noted, has been running on 27 percent ethanol-blended petrol for 49 years.
Gadkari did not stop at vehicles and fuel. He flagged India’s road safety crisis, with 5 lakh accidents and 1.8 lakh deaths in 2023, two-thirds of which involved people aged 18–34.
“Energy security from global point of view is very very important… now global instability is there,” he said, linking fuel policy, scrappage, and safety under the same umbrella of national security.
What comes next
The Automotive Research Association of India (ARAI) is currently testing E27 fuel compatibility. Once cleared, the proposal will move to the petroleum ministry, then to the Cabinet.
If the scrappage drive scales up, paired with ethanol adoption, Gadkari believes it could reshape India’s auto economy, cut pollution, and strengthen energy independence.
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