India’s Vehicle Scrappage Policy: Driving Transformation in the Auto Sector
At the ACMA India Annual Session 2025, Union Transport Minister Nitin Gadkari highlighted the game-changing potential of India’s Vehicle Scrappage Policy, calling it one of the most transformative reforms for the nation’s automobile ecosystem. He stressed that scrapping 97 lakh unfit and polluting vehicles across the country could unlock a massive opportunity — generating ₹40,000 crore in GST revenue while simultaneously creating around 70 lakh jobs.
As of August 2025, encouraging progress has already been made. Nearly 3 lakh vehicles have been scrapped under the initiative, including 41 lakh government-owned vehicles that were retired after exceeding their operational lifespan. The program has also attracted significant private investment worth ₹2,700 crore, signaling growing industry confidence in the policy’s long-term benefits. On average, close to 16,830 vehicles are being retired every month through the Voluntary Vehicle Fleet Modernisation Program (V-VMP), a critical step toward building a greener, safer, and more efficient mobility ecosystem.
The scrappage policy mandates periodic fitness tests for both commercial and private vehicles, while government-owned vehicles are compulsorily retired after 15 years. This ensures that only roadworthy vehicles continue to operate, reducing emissions, improving road safety, and lowering fuel dependency.
Gadkari further urged automakers to step up and actively support the initiative. He proposed that manufacturers provide a minimum 5% discount on new vehicle purchases made against a valid scrappage certificate. According to him, this incentive will not only boost sales volumes but also accelerate the modernization of India’s vehicle fleet, making it safer and more environmentally sustainable.
From an industry perspective, the policy holds additional advantages. The minister underlined that recycling materials from scrapped vehicles could cut auto component costs by up to 25%, enhancing the competitiveness of Indian manufacturers in global markets. This cost reduction, coupled with fresh demand generated through scrappage-linked incentives, is expected to give the sector a substantial growth push.
Looking ahead, Gadkari expressed strong confidence in India’s automotive industry. With a domestic market already valued at ₹22.2 lakh crore, India today ranks as the third-largest automobile market in the world, behind only the United States and China. He predicted that with the right momentum and execution of reforms like the scrappage policy, India could emerge as the world’s No.1 automobile industry within the next five years.
The Vehicle Scrappage Policy is thus more than just an environmental reform — it is a comprehensive growth strategy designed to stimulate the economy, generate employment, modernize the auto fleet, reduce pollution, and enhance global competitiveness. As the policy gathers pace, its ripple effects are expected to be felt across manufacturing, steel, energy, and even consumer markets, making it one of the cornerstones of India’s mobility revolution.
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