Central Minister Nitin Gadkari has proposed a significant economic strategy centered around vehicle scrapping in India. He believes that scrapping all 97 lakh unfit and polluting vehicles could generate a 40,000 crore rupee benefit from GST and create 70 lakh jobs. Speaking at the ACMA annual meeting, Gadkari emphasized that this initiative would not only boost government revenue but also propel India towards becoming the world’s leading automobile industry within five years. The current vehicle scrapping situation is modest, with only 3 lakh vehicles scrapped by August 2025, including 1.41 lakh government-owned vehicles. On average, 16,830 vehicles are scrapped monthly. The private sector has invested 2,700 crore rupees in building this ecosystem. Gadkari encouraged automakers to offer at least a 5% discount to customers presenting scrapping certificates when purchasing new vehicles. He highlighted that this is not a donation, but a way to increase demand. The effective implementation of the scrapping policy could reduce the cost of automobile parts by 25% by bringing recycled steel, aluminum, and other materials back into the supply chain. Additionally, removing 97 lakh unfit vehicles would reduce emissions, decrease fuel consumption, and improve road safety standards. Gadkari emphasized India’s ambition to become a global leader in the automotive industry, aiming to surpass the current size of the Indian automobile industry, which is 22 lakh crore rupees, compared to China’s 47 lakh crore rupees and the US’s 78 lakh crore rupees. He also addressed the challenge of fuel imports, which cost India 22 lakh crore rupees annually, and advocated for diversifying agriculture into energy, including increasing ethanol production from sugarcane, broken rice, and other crops, with India already moving from E20 to E27. He pointed out that Brazil has been running on 27% ethanol-blended gasoline for 49 years. Gadkari also highlighted the road safety crisis in India, with 5 lakh accidents and 1.8 lakh deaths in 2023, where two-thirds of the accidents involved people aged 18-34. He connected fuel policy, scrapping, and safety under a national security umbrella. The Automotive Research Association of India (ARAI) is currently testing the suitability of E27 fuel. If approved, the proposal will go to the Petroleum Ministry and then the Cabinet. Gadkari believes that promoting the scrapping campaign along with the adoption of ethanol could transform India’s auto economy, reduce pollution, and strengthen energy independence.
