Scrapping Old Vehicles Could Unlock Rs 40,000 Crore in GST, Says Gadkari

Union minister Nitin Gadkari on Friday urged India’s automobile sector to seize the opportunity in scrapping unfit and polluting vehicles, arguing that a full-scale clean-up could generate as much as Rs 40,000 crore in Goods and Services Tax, create 70 lakh jobs and give a decisive push to India’s ambition of becoming the world’s largest automobile industry within five years.

Speaking at the ACMA Annual Session 2025, Gadkari pointed out that progress so far has been limited. Up to August this year, only three lakh vehicles have been scrapped, of which 1.41 lakh belonged to the government. On average, about 16,800 vehicles are being scrapped each month, while the private sector has so far invested Rs 2,700 crore in building the necessary infrastructure.

Gadkari urged automobile manufacturers to accelerate the process by offering at least a 5% discount to customers presenting a scrappage certificate when purchasing a new vehicle. He stressed this was not charity, but a way to stimulate fresh demand and keep the industry’s pipeline strong. He added that the recycling of steel, aluminium and other materials could cut component costs by 25%, while simultaneously reducing emissions, improving fuel efficiency and enhancing road safety.

The minister highlighted India’s current automobile industry size of Rs 22 lakh crore, compared with China’s Rs 47 lakh crore and the US’ Rs 78 lakh crore, insisting that India could take the top spot globally within the next five years. At the same time, he raised concerns over India’s Rs 22 lakh crore annual fossil fuel import bill, which he described as unsustainable both economically and environmentally.

To address this, he pressed for greater ethanol production from sugarcane, broken rice and other crops, and pointed to Brazil’s long-standing success with 27% ethanol-blended petrol. India, he noted, is moving from E20 to E27 blending, with the Automotive Research Association of India currently testing compatibility before the proposal moves to the petroleum ministry and Cabinet.

Gadkari also focused on road safety, recalling that 2023 saw five lakh accidents and 1.8 lakh fatalities, two-thirds of them among people aged 18 to 34. Linking scrappage, cleaner fuels and safety under the same framework, he described energy security as a national priority in the face of global instability.

If scaled up effectively, Gadkari believes the scrappage drive, combined with a shift to ethanol, could reshape India’s auto economy, cut pollution and reduce dependence on costly imports, while putting millions of people to work in a cleaner, more secure transport system.