New Delhi: Union minister Nitin Gadkari said on Tuesday that automakers could get a revenue boost by embracing vehicle scrapping.
"Automakers can see an 18-20% increase in sales if they invest in vehicle scrapping and fitness centres," Gadkari, Union minister for road transport and highways, said while speaking at the annual gathering of the Society of Indian Automobile Manufacturers (SIAM). He urged manufacturers to provide an at least 3% discount on new purchases when customers scrap their old vehicles.
With nearly three crore end-of-life vehicles, Gadkari said the scrapping policy offers a win-win opportunity for the industry and the government.
"By scrapping vehicles, automakers can reduce the cost of components by 30%-40% and improve profit margins," he said. He pointed out that in developed markets like the US and Europe, vehicle scrapping has led to an additional increase of 9-12% in sales.
Currently, 63 operational scrapping centres and 78 fitness centres have been established, and more are likely to come up. "We have already invested ₹10,000 crore in scrapping infrastructure, and this will create 35,000 new jobs while reducing steel imports by 65 lakh tonnes," Gadkari said.
Some automakers have agreed to offer up to a 3% discount on scrapped vehicles, but they have emphasized that the success of the policy depends on developing a comprehensive network of fitness centres than on the discounts themselves.
Gadkari reiterated that the automotive sector’s role is crucial in achieving India's goal of becoming carbon-neutral by 2070. Citing that the transport sector contributes 30-40% of air pollution in the country, he said, "We need to protect our citizens from air pollution at any cost."
He urged automakers to adopt electric vehicles (EVs) and alternative fuels to reduce emissions.
The two-wheeler segment accounts for 56% of EV sales, and the overall market is expected to touch 1 crore annual sales by 2030, creating 5 crore jobs, he said. The evolving EV finance market is estimated to reach ₹4 trillion by then, he said.
Gadkari also highlighted a shift in customer expectations. "Consumers are no longer cost-centric; they are quality-centric," he said, encouraging manufacturers to focus on design, quality, and technology innovations. "This is a big change in the mindset of people, and automakers need to adapt to this by providing high-quality, well-designed vehicles."
He also underscored the importance of crash testing facilities in ensuring vehicle safety and boosting exports. Gadkari said India plans to enhance its Bharat NCAP (New Car Assessment Program) by including ratings from one to five stars, similar to the global standards. This will foster healthy competition among Indian original equipment manufacturers and ensure that vehicles made in India meet international safety standards.
The minister encouraged the automotive industry to explore alternatives such as biofuels, ethanol, and CNG to reduce dependence on fossil fuels. He cited Brazil’s success in biofuel production and how India is emerging as a leader in the G20 alliance for biofuels. "CNG vehicle markets have grown from 750 stations in 2014 to over 4,500 stations today, showing our progress in this sector."
The development of domestic lithium-ion battery production will also be vital for reducing costs and positioning India as a potential exporter of this critical component in the future, he said.
