Vehicle Scrapping Policy Could Generate ₹40,000 Crore GST, Says Nitin Gadkari
Union Minister for Road Transport and Highways Nitin Gadkari has said that scrapping India’s 97 lakh unfit and polluting vehicles could generate ₹40,000 crore in Goods and Services Tax (GST) revenue for the Centre and states, while also creating 70 lakh jobs.
Speaking at the ACMA Annual Session 2025, Gadkari revealed that as of August, three lakh unfit vehicles have already been scrapped, including 1.41 lakh government-owned vehicles. Currently, an average of 16,830 vehicles are scrapped every month, with the private sector investing around ₹2,700 crore to support the initiative.
The government’s Voluntary Vehicle Fleet Modernisation Program (V-VMP) aims to phase out polluting vehicles through eco-friendly scrappage processes. Under existing rules, fitness tests for commercial vehicles are required every two years up to eight years, and annually thereafter. Private vehicles must undergo tests at the time of registration renewal after 15 years, and government vehicles are mandatorily retired after 15 years.
Gadkari also urged the automobile industry to offer at least 5% discounts to customers submitting a scrappage certificate when purchasing a new vehicle. He noted that this would boost demand while reducing component costs by up to 25%.
Highlighting India’s position in the global auto sector, Gadkari said the industry currently stands at ₹22 lakh crore, compared to China’s ₹47 lakh crore and the US’s ₹78 lakh crore. He expressed confidence that India could become the world’s number one automobile market within five years.
The minister also stressed the urgency of reducing dependence on fossil fuel imports, which cost India ₹22 lakh crore annually, and emphasized the role of ethanol-based fuel from sugarcane, rice, and other crops in improving energy security.
On road safety, Gadkari called attention to the rising number of accidents, citing 5 lakh road accidents and 1.8 lakh deaths in 2023, with the majority of victims aged 18–34. He further clarified that the government is considering 27% ethanol blending in petrol (E27), but only after thorough testing by ARAI and final approval by the Cabinet.
