Scrapping 9.7 million unfit vehicles could generate ₹40,000 crore GST: Gadkari

Under existing Motor Vehicles Rules, fitness tests for commercial vehicles are mandatory every two years up to eight years, and annually thereafter.

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Road Transport and Highways Minister Nitin Gadkari on Friday said the Centre and states could earn up to ₹40,000 crore in goods and services tax (GST) if all of the 9.7 million unfit and polluting vehicles in the country are scrapped. Speaking at the annual session of the Automotive Component Manufacturers Association of India (ACMA), Gadkari said around 300,000 such vehicles had already been scrapped till August, including 141,000 government vehicles. “According to our estimate, there are 9.7 million unfit and polluting vehicles which we need to scrap… Seven million jobs will be created and ₹40,000 crore benefits will go to the Centre and states in GST if all unfit and polluting vehicles are scrapped,” he said. On average, 16,830 vehicles are being scrapped every month, Gadkari noted, adding that private players have invested ₹2,700 crore in setting up scrapping centres. The government has implemented the Voluntary Vehicle Fleet Modernisation Programme (V-VMP) to create an ecosystem for phasing out unfit vehicles in an eco-friendly manner.

Under existing Motor Vehicles Rules, fitness tests for commercial vehicles are mandatory every two years up to eight years, and annually thereafter. Private vehicles require fitness tests at the time of registration renewal after 15 years, and subsequently every five years. For government-owned vehicles, the usage expires after 15 years.

Gadkari urged automakers to offer customers at least a 5 per cent discount on new vehicles against scrappage certificates. “It is not charity, because it is going to increase the demand,” he said.

He added that successful implementation of the scrappage policy could also bring down the cost of automobile components by 25 per cent.

On ethanol blending

Responding to queries on the government’s proposal to allow 27 per cent ethanol blending in petrol (E27), Gadkari said the move would only be cleared after thorough testing. “We are not going to compromise with the quality. After completing all tests, the Automobile Research Association of India (ARAI) will send the proposal to the petroleum ministry. The ministry will recommend it to the Cabinet and then we will take the decision on E27, so there is no confusion about it,” he said. He noted that countries like Brazil have used 27 per cent ethanol blending for nearly five decades. Prime Minister Narendra Modi had launched 20 per cent ethanol-blended petrol in 2023.

“We experiment first for years and only then accept the policy. There is no problem in quality. Companies like Toyota, Hyundai, Tata, Mahindra, Bajaj, Honda have all issued clarifications,” Gadkari said, adding that no complaints had been received so far.