Union minister for road transport and highways Nitin Gadkari has said that the Centre and states together could earn up to ₹40,000 crore in Goods and Services Tax (GST) if all of India’s 97 lakh unfit and polluting vehicles are scrapped.
Speaking at the ACMA Annual Session 2025, he noted that scrapping could also create around 70 lakh jobs. So far, up to August this year, about 3 lakh vehicles have been scrapped, including 1.41 lakh government vehicles. At present, an average of 16,830 vehicles are being scrapped every month, with the private sector investing nearly ₹2,700 crore in the process.
The government’s Voluntary Vehicle Fleet Modernisation Programme (V-VMP), popularly called the Vehicle Scrapping Policy, is aimed at gradually phasing out unfit and polluting vehicles in an environment-friendly manner.
Under the motor vehicles rules, fitness tests are mandatory for commercial vehicles every two years until they are eight years old and annually thereafter. For private vehicles, the test is required when registration is renewed after 15 years, and then every five years. Vehicles owned by governments automatically expire after 15 years.
Gadkari also appealed to the auto industry to consider offering a minimum 5% discount to customers who provide a scrappage certificate when buying a new vehicle. “It is not charity, because it is going to increase the demand,” he said.
The minister said the successful implementation of the scrappage policy could reduce the cost of automobile components by 25%. He added that GST rationalisation, with rates on smaller vehicles and parts coming down from September 22, would act as an incentive to boost demand.
“Prime Minister Narendra Modi has taken a decision to reduce the GST rates, and that is a good incentive for all of you. This is going to increase your market potential, boost demand and increase the size of the industry,” Gadkari told the industry gathering.
He expressed confidence that India could emerge as the world’s number one automobile industry within five years. The current size of the US auto industry stands at ₹78 lakh crore, followed by China at ₹47 lakh crore, while India is at ₹22 lakh crore.
Touching on India’s dependence on imported fossil fuels worth ₹22 lakh crore annually, Gadkari stressed the need to diversify agriculture into energy. He pointed out that ethanol derived from sugarcane, broken rice and other produce could help India, the world’s third-largest oil consumer, cut back on overseas shipments.
On ethanol blending, he responded to concerns over the government’s proposal for 27% blending (E27). Citing Brazil’s experience of using E27 petrol for nearly five decades, he clarified that quality will not be compromised. Once all tests are completed by the Automobile Research Association of India (ARAI), the proposal will move to the petroleum ministry, then to the Cabinet.
Currently, India has introduced 20% ethanol-blended petrol (E20), launched in 2023, with engines able to run on E20 with minor modifications.
Gadkari also flagged India’s road safety record, noting that in 2023 there were 5 lakh accidents and 1.8 lakh deaths, with 66% of victims aged 18–34. He emphasised that alongside cleaner vehicles and better energy policies, improving safety on Indian roads remains urgent.