Scrapping 97 Lakh Vehicles: Ambition, Reality and the Long Road Ahead

When a minister speaks about numbers that can transform an industry and, by extension, livelihoods, it's tempting to treat the claim as a moment of political theatre. But there is something quietly radical in Nitin Gadkari's pitch: phase out 97 lakh unfit vehicles, and India could gain Rs 40,000 crore in GST revenue and create roughly 70 lakh jobs. That is a bold coupling of environmental policy and industrial strategy — and it deserves both admiration and scrutiny (Business League; Trak.in).

What the plan promises — and what the early data shows

I read the announcements and the underlying figures with a mix of optimism and realism. The promises are straightforward:

• A potential Rs 40,000 crore boost to GST receipts if 97 lakh vehicles are scrapped. Business League
• Creation of up to 70 lakh jobs in the scrappage and recycling ecosystem. Trak.in
• Component-cost reductions (estimated up to 25%) by reincorporating recycled steel, aluminium and other materials back into supply chains. Business League

Yet the reality on the ground is telling: only about 3 lakh vehicles had been scrapped up to August 2025 — of which 1.41 lakh were government vehicles — averaging roughly 16,830 scrappages a month. That is a long way from 97 lakh. Private investment into the scrappage ecosystem is modest so far (reported at around Rs 2,700 crore). Trak.in

Additional context and data from practitioners and long-running commentary underline the scale challenge. As documented in a recent personal blog tracing policy debates and operational numbers, India has roughly 350 million registered vehicles (some ~260 million two-wheelers) and adds many millions of vehicles each year (estimates for 2024–25: ~15–18 million two-wheelers, ~3.5–4 million passenger cars). Government estimates suggest ~20–25 million cars, trucks and buses are currently eligible for scrappage under age-based rules. MoRTH/industry trackers also report that only a few lakh vehicles have been scrapped since 2022 (variously 2.5–3.4 lakh in different summaries) despite an installed RVSF network (171 approved facilities, ~101 operational), and that even if we scaled to 5 lakh scrappages per year it would take decades to clear existing backlogs. These calculations sharpen the point: the ambition is large, but the arithmetic and rates of implementation must change dramatically to meet the targets (Polluters Must Pay — myblogepage).

Why I believe the idea is right in spirit — and where it risks running aground

There is an elegant logic to this policy: older vehicles are disproportionately polluting, less fuel-efficient, and often unsafe. Removing them reduces emissions, improves safety and injects material and demand back into the economy. In a circular-economy view, scrappage turns waste into input — lowering costs and dependency on raw imports. Business League

But a policy is not an idea on paper; it is a series of transactions, incentives and infrastructures. That’s where the risk lies:

• Scale mismatch: the current monthly scrappage rate is tiny relative to the target. Even doubling or tripling the current rates still leaves decades to reach the goal. Trak.in
• Incentive insufficiency: a suggested 5% discount from manufacturers for buyers who present scrappage certificates is helpful, but may not be decisive for many buyers, especially lower-income households who own older two-wheelers and small cars. Business League
• Infrastructure gaps: efficient, environmentally safe scrapping requires certified end-of-life vehicle (ELV) centres across geographies, transparent chains for recovered metals, and logistics to move vehicles. The current private investment is a start but not sufficient for nationwide rollout. Trak.in

Societal and distributional questions that matter to me

Policies that change the stock of consumer assets always carry distributional consequences. Who bears the transition costs? Who gains the most?

• Low-income owners of older two-wheelers or small cars may find replacement unaffordable even with discounts.
• Informal sector workers who rely on old vehicles (for delivery, small trade) will need alternatives before a blanket phase-out is enforced.
• The promise of 70 lakh jobs is attractive, but the quality, location and permanence of these jobs matter — are they formal, unionisable, and sustainable?

These are not secondary questions. How we answer them will determine whether scrappage is perceived as opportunity or coercion.

Practical levers I keep returning to

As someone who thinks in systems, I see a few levers that could give this policy the teeth it needs:

• Incentive layering: combine manufacturer discounts with targeted financial instruments (low-interest trade-in loans, higher subsidies for lower-income owners, tax benefits for fleet owners) so the calculus changes for every income cohort.
• Infrastructure scale-up: certified ELV centres, modular and mobile scrapping units for rural areas, and traceable metal recycling chains so recycled material reliably re-enters industry.
• Demand assurance: public procurement of newer, cleaner vehicles for government fleets and for public transport can provide steady demand to absorb replacement sales.
• Coordination across levels: central policy design is necessary, but state and municipal implementation, customs and GST clarity, and industry participation will make or break the rollout.

Several of these themes are already implicit in ministerial comments — particularly the push to make scrappage a demand-creation mechanism for industry (Business League; Trak.in).

There is also a well-developed set of practical, operational ideas that deserve attention and which I have advocated earlier. For example, a technology-first approach could automate identification and enforcement: factory-installed (and easily retrofittable) emission sensors that measure real-time pollutants, transmit vehicle-level data to central/state transport servers, and integrate with traffic enforcement tools. Such devices could trigger visible alerts (a red light or dashboard warning) when emissions exceed limits, feed into a mobile app for enforcement and scrappage claims, and — after persistent defaults — enable automatic registration suspension. Embedding the scrappage transaction in this digital chain (owner confirms disposal at registered scrap dealers via an app; dealer confirms purchase; DBT incentive is credited to the owner's Jan Dhan account) eliminates much human friction and leakage. These ideas are practical, not theoretical, and have been part of public commentary on how to move from aspiration to delivery (Polluters Must Pay — myblogepage).

Scaling these technical and financial levers rapidly matters because the numbers are stark: with ~350 million vehicles on the road and millions added annually, the backlog of old vehicles is large (policy estimates put scrappage-eligible cars, trucks and buses at roughly 20–25 million). Current capacity among large players (Tata, Mahindra Accelo/CERO, Maruti Suzuki Toyotsu and others) suggests substantial installed annual capacities, but utilization and geographic coverage remain uneven. Without simultaneous progress on identification, incentives, and logistics, the programme risks remaining a set of good intentions rather than a transformation.

Final reflection

Big national transitions rarely happen by edict alone. They require incentives aligned with human behaviour, infrastructure that meets geography, and an honest accounting of who bears which costs. I admire the ambition behind the numbers — Rs 40,000 crore of GST, 70 lakh jobs, a cleaner fleet — but I am also mindful that ambition without the scaffolding of implementation becomes rhetoric. If India is serious about turning this into a programme of industrial renewal and environmental justice, the next chapter must be about making the economics add up for every citizen, not only for industry balance sheets.

If we do that, the scrappage policy could be more than a revenue or jobs headline: it could become a quiet example of how circular economics rebuilds an industry while repairing the environment.

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Regards,
[Hemen Parekh] Any questions? Feel free to ask my Virtual Avatar at hemenparekh.ai