Centre, states to earn Rs 40,000 cr in GST if all 97 lakh polluting vehicles scrapped: Gadkari

New Delhi: Union Minister Nitin Gadkari on Friday said the Centre and states could earn up to Rs 40,000 crore in Goods and Services Tax if all 97 lakh unfit and polluting vehicles are scrapped.

Addressing ACMA Annual Session 2025, Gadkari further said up to August this year, 3 lakh unfit and polluting vehicles have been scrapped, out of which 1.41 lakh were government vehicles.

"According to our estimate, there are 97 lakh (unfit and polluting) vehicles, which we need to scrap...70 lakh jobs will be created and Rs 40,000 crore benefits will go to the Centre and states in GST if all unfit and polluting vehicles will be scrapped," he said.

The road transport and highways minister said that at present, an average 16,830 vehicles are being scrapped monthly, and the private sector has invested Rs 2,700 crore.

The government has implemented he Voluntary Vehicle Fleet Modernization Program (V-VMP) or Vehicle Scrapping Policy for creation of an ecosystem to phase out unfit and polluting vehicles in an environment-friendly manner.

Under the Motor Vehicles Rules, fitness test for commercial vehicles is mandatory every two years up to eight years and annually thereafter. In case of private vehicles this test is required at the time of registration renewal, which is after 15 years and then every five years. For vehicles registered in the name of governments, the usage expires after 15 years.

Gadkari also urged the automobile industry to consider offering a minimum discount of 5 per cent to customers who submit a scrappage certificate while buying a new vehicle. "It is not charity, because it is going to increase the demand," he said.

According to Gadkari, while the auto industry has benefited a lot from the GST rationalisation, the successful implementation of Vehicle Scrapping Policy is going to reduce the cost of automobile component by 25 per cent.

"Prime Minister Narendra Modi has taken decision 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 size of the industry.

"I am very much confident that we will make India's automobile industry number one in the world within next five years," he said.

Presently, the size of the US automobile industry is Rs 78 lakh crore, followed by China (Rs 47 lakh crore) and India (Rs 22 lakh crore).

The minister noted that India is spending Rs 22 lakh crore for importing fossil fuels every year and because of import of fossil fuels, “we are facing problem of pollution”.

Stressing on need of diversification of agriculture into energy, Gadkari said, use of ethanol, extracted from sugarcane as well as broken rice and other agri produce, will help India - the world’s third largest oil consumer - bring down its reliance on overseas shipments.

"Energy security from global point of view is very very important..Now global instability is there."

Raising concerns over road safety, Gadkari pointed out that in 2023, there were 5 lakh accidents and 1.8 lakh deaths, in which 66 per cent were from the 18-34 age group.

Responding to a question on the government's proposal of 27 per cent ethanol blending in petrol(E27), Gadkari said countries like Brazil are using 27 per cent ethanol blending in petrol for the last 49 years.

" We are not going to compromise with the quality... after completing all tests, ARAI( Automobile Research Association of India) will send the proposal to the petroleum ministry. The the ministry will recommend to the Cabinet and then we will take the decision on E27, so there is no confusion about it," he said.

Prime Minister Narendra Modi had launched the higher 20 per cent ethanol-blended petrol in 2023.

Currently, automobile engines can run on E20 with minor modifications in engines for corrosion, etc.