India’s vehicle scrappage drive could unlock ₹40,000 crore in GST: Gadkari

Union Transport Minister Nitin Gadkari charted the vast potential of India's vehicle scrappage policy, emphasizing economic and environmental benefits. At the ACMA Annual Session 2025, he stated that scrapping all 97 lakh unfit and polluting vehicles in the nation would bring up to ₹40,000 crore to the GST kitty while generating approximately 70 lakh jobs.

According to the minister, around 3 lakh vehicles have been scrapped till August 2025, including 1.41 lakh government-owned vehicles. 16,830 vehicles on average are being retired each month with the help of private investment worth ₹2,700 crore. This is under the Voluntary Vehicle Fleet Modernization Program (V-VMP) also called the Vehicle Scrapping Policy to contain pollution through sustainable disposal of old vehicles.

The policy requires commercial vehicles to undergo a fitness test every two years until age eight, and every year thereafter. Private vehicles undergo tests during registration renewal after 15 years and then every five years. Government vehicles are retired after 15 years of service.

Industry incentives and economic implications

Gadkari encouraged automakers to offer a minimum 5 per cent discount to customers submitting a scrappage certificate while purchasing new vehicles, framing it as a market growth strategy rather than charity. He noted that successful implementation of the scrappage policy could reduce the cost of auto components by up to 25 per cent, further boosting the sector.

Highlighting India’s growing global footprint in automotive manufacturing, Gadkari said, “I am very confident that we will make India the world’s number one automobile industry within the next five years," pointing out that India’s auto market currently stands at ₹22 lakh crore, behind the US ( ₹78 lakh crore) and China ( ₹47 lakh crore).

Environmental and energy benefits

Gadkari stressed the dual advantage of scrappage in curbing pollution and reducing fossil fuel imports, which cost India ₹22 lakh crore annually. He also flagged ethanol blending as a path toward energy security, citing Brazil’s 49-year experience with 27 per cent ethanol in petrol. While India currently uses E20 petrol, Gadkari confirmed that the proposed E27 blend will only be adopted after rigorous testing and approval by ARAI and the Petroleum Ministry.

Road safety concerns

The minister also spoke on road safety, quoting shockingly high 2023 statistics: 5 lakh accidents with 1.8 lakh fatalities, of which two-thirds had the age bracket of 18–34 years involved. He presented vehicle modernization and the adoption of ethanol as the key to accident diminishment, pollution reduction, and fuel independence.

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