The government is working towards making India a global automobile manufacturing hub and the domestic industry is expected to be worth Rs 15 lakh crore in the near term, Union Minister Nitin Gadkari said on Tuesday.

Virtually inaugurating Tata Motor's vehicle scrapping facility in Jaipur, Gadkari said the automobile sector currently contributes to 7.1 per cent of the nation's GDP with the industry size at around Rs 7.8 lakh crore.

"The auto sector gives direct and indirect employment to around 4 crore people and this number is expected to grow to 5 crore by 2025. I am working with a target to make India number one global automobile manufacturing hub and to take its size to Rs 15 lakh crore in the near future," he noted.

Gadkari noted that the scrappage policy enables removal of older and unfit vehicles and introduction of new lesser polluting vehicles in a phased manner.

"It is estimated that the automotive demand generated by the scrapping policy will lead to additional GST revenue of Rs 40,000 crore to the government and the raw material cost for new cars will go down by 30 per cent," he stated.

He noted that the country currently imports 8 million tonnes of scrapped steel annually.

"About 50-60 scrapping centres can bring down demand for imports of steel scrap making India self reliant," the minister said.

He added that vehicle scrapping would help in establishing an organised industry thereby enabling new employment opportunities.

"My aim is to develop a scrapping centre within a reach of 150 kilometres from all the city centres," Gadkari said, adding that India could become a scrapping hub for the entire South East Asia.

"We can establish automobile clusters in the port areas... Ultimately, it is a win-win situation for all stakeholders," Gadkari said.

Tata Motors' first registered vehicle scrapping facility in Jaipur has a capacity to dismantle 15,000 vehicles per annum.

The Re.Wi.Re or Recycle with Respect facility is operated by Tata Motors' partner Ganganagar Vaahan Udyog Pvt Ltd to scrap end-of-life passenger and commercial vehicles of all brands.

"The inauguration of this RVSF (Registered Vehicle Scrapping Facility) heralds a new beginning in responsible scrapping of end-of-life vehicles. With globally benchmarked and optimised recycling processes, we intend to yield maximum value from the scrap for future use and minimise waste for the overall betterment," Tata Motors Executive Director Girish Wagh said.

The company looks forward to setting up Re.Wi.Re facilities across the country in collaboration with partners, he added.

"These decentralised facilities will benefit the customers, share the economic value generated, create employment while addressing the need of scrapping vehicles in every part of the country in an eco-friendly manner," Wagh said.