Union Minister Nitin Gadkari has urged India’s automobile industry to accelerate the scrappage of unfit and polluting vehicles, a move he says could unlock ₹40,000 crore in GST revenue, create 70 lakh jobs, and help India become the world’s leading automobile market within the next five years.
Where India Stands Today
Progress on the scrappage policy has been slow. Till August 2025, just 3 lakh vehicles have been scrapped, including 1.41 lakh government-owned units. On average, 16,830 vehicles are being scrapped every month. The private sector has invested ₹2,700 crore to build the required ecosystem. India’s Vehicle Scrapping Policy (V-VMP) aims to phase out old, unsafe, and polluting vehicles in a sustainable way.
Discounts to Drive Scrappage
Gadkari has called on automobile manufacturers to incentivize scrapping by offering at least 5% discount on new purchases against scrappage certificates. He stressed this is not charity but a strategy to boost demand, ensuring a continuous cycle of scrapping and replacement that sustains industry growth.
Cleaner Air, Cheaper Components
The minister highlighted that effective implementation could lower automobile component costs by 25% as recycled steel, aluminium, and other materials re-enter the supply chain. Beyond economics, scrapping 97 lakh old vehicles would reduce emissions, improve fuel efficiency, and enhance road safety standards.
India’s Auto Industry Ambition
The Indian automobile industry is currently valued at ₹22 lakh crore, compared to China’s ₹47 lakh crore and the US’s ₹78 lakh crore. Gadkari expressed confidence that India could lead the global auto industry within five years, provided scrappage and green fuel initiatives scale up.
Fuel Imports and Ethanol Push
India spends ₹22 lakh crore annually on fossil fuel imports. To reduce this dependency, Gadkari emphasized boosting ethanol production from sugarcane, broken rice, and other crops. India is advancing from E20 to E27 ethanol blending, a model Brazil has successfully implemented for decades.
Linking Road Safety and Energy Security
With 5 lakh road accidents and 1.8 lakh deaths in 2023—most involving young people—Gadkari linked scrappage, ethanol adoption, and safer roads under the banner of national security. The Automotive Research Association of India (ARAI) is currently testing E27 fuel, with Cabinet approval expected after clearance.
