Government’s vehicle scrapping policy will increase automobile sales by 18%: Nitin Gadkari

Nitin Gadkari, Union Minister for Road Transport and Highways, has stated that India's automotive sales are likely to increase by 18% as a result of the government's scrapping policy, which requires private diesel and gasoline vehicles older than ten years and buses older than fifteen years to be scrapped. This policy has come into effect from April 1, 2023.

"Using scrapped vehicle materials saves 33% on raw material costs while increasing new vehicle sales by 18-20%," he said. 

"However," Gadkari stated at the 63rd SIAM Annual Convention, "I will request that automobile manufacturers provide a discount for purchases against a scrapped vehicle."

As part of its vehicle scrapping strategy, the Central Government has provided a Rs 2,000 crore incentive to state governments via the Special Assistance to States for Capital Investment 2022-23.

According to Nitin Gadkari, the vehicle scrappage programme will generate an additional Rs 40,000 crore in GST revenue for the government.

"Scrapping older vehicles will reduce India's reliance on imported metals such as aluminium and copper, as well as rubber, and will aid in the development of a circular economy," Gadkari said at the convention.

He also stated that the government is working with the industry to develop new technologies for electric vehicles, electric highways, and the sustainable use of mining wastelands.

The Ministry of Road Transport & Highways is also discussing the possibility of providing subsidies to encourage the voluntary disposal of old automobiles, with the Finance Ministry.

It is estimated that India imports US$ 34.7 billion in metals each year.

China, South Korea, Japan, the United Arab Emirates, and the United States are the top five metal importers in India.

Gadkari also stated that recycling aluminium, copper, steel, rubber, and plastic could reduce the cost of automobile components by 20-25%.

He also stated during his address that the government intends to reduce India's high logistics costs which are currently 14-16%, through the construction of new highways and the use of alternative fuels.

He further stated that "India's move towards a circular economy is important, and soon you will see the industry being able to reduce its operational costs, which will also boost its export competitiveness."