Vehicle Scrappage Policy Could Add ₹40,000 Cr GST to Exchequer, Says Gadkari

Union Minister Nitin Gadkari on Friday said the Centre and states could earn up to Rs 40,000 crore in GST if all 97 lakh unfit and polluting vehicles in the country are scrapped.

Speaking at the ACMA Annual Session 2025, Gadkari said that by August this year, about three lakh vehicles had already been scrapped, including 1.41 lakh government vehicles.

“According to our estimate, there are 97 lakh such vehicles that need to be scrapped. This will create nearly 70 lakh jobs and generate Rs 40,000 crore for Centre and states in GST,” he said, as quoted in a PTI report.

At present, around 16,830 vehicles are scrapped every month, with private players investing Rs 2,700 crore so far in scrapping infrastructure. The government has rolled out the Voluntary Vehicle Fleet Modernisation Program (V-VMP), also known as the Vehicle Scrapping Policy, to phase out unfit and polluting vehicles in an environment-friendly manner.

Under the rules, fitness tests are mandatory for commercial vehicles every two years up to eight years and annually thereafter. For private vehicles, the test is required at the time of registration renewal after 15 years and every five years subsequently. Government vehicles have a fixed 15-year lifespan.

Gadkari urged automakers to offer at least a 5% discount to customers producing a scrappage certificate when buying new vehicles. “It is not charity; it will only boost demand,” he said.

He added that the scrapping policy would also reduce automobile component costs by 25%, further strengthening the sector alongside GST rationalisation. “I am very confident India will become the world’s number one automobile industry within five years,” Gadkari asserted.

Currently, the automobile industry is valued at Rs 78 lakh crore in the US, Rs 47 lakh crore in China, and Rs 22 lakh crore in India.

Highlighting India’s reliance on imports, Gadkari noted that the country spends Rs 22 lakh crore annually on fossil fuels, which also contributes to rising pollution. He called for diversification of agriculture into energy production, citing ethanol from sugarcane, broken rice, and other produce as a viable alternative.

On road safety, Gadkari flagged an alarming rise in accidents, with five lakh accidents and 1.8 lakh deaths in 2023, of which 66% victims were aged 18–34.

Responding to a query on the proposed 27% ethanol blending (E27), he said countries like Brazil had adopted it for decades. “We will not compromise on quality. After all tests are completed, ARAI will send its report to the petroleum ministry, which will then seek Cabinet approval,” he clarified.