Beyond the scrapyard: Accelerating the formal End-of-Life Vehicles recycling ecosystem in India

End-of-Life Vehicles (ELVs) in India refer to all vehicles that can no longer be legally registered or have been deemed unfit through testing or those that the owner has voluntarily declared as waste. India currently has 29.5 crore vehicles on roads, with an additional 2 crore vehicles added yearly. According to the Central Pollution Control Board (CPCB), approximately 2 crore vehicles will reach the end of their lives by 2025. The environmental impact of an ELV is significant. An ELV is estimated to pollute nearly eight times more than a new car.

The expected growth in the number of end-of-life vehicles on the road, coupled with their environmental impact, necessitates setting up a robust end-of-life recycling ecosystem. End-of-life recycling could also provide critical resources such as steel, aluminium, copper, plastic, etc which reduces the need for virgin materials. For example, approximately 2.1 crore vehicles expected to reach their end of life by 2025 could potentially provide ~7 million metric tonnes of scrap steel. This is almost equivalent to the amount of steel scrap currently imported in India.

Current landscape in India

Approximately 75% of the ELV recycling happens through the informal sector. The informal sector is characterised by health risks, environmental hazards, and inefficient recycling. To address this challenge, the Indian government has introduced several policies, that are aimed at establishing a robust formal ELV recycling ecosystem. 

Some of these policies include the AIS 129 (2015), which provides guidelines for the management of ELVs, and the Vehicle Scrappage Policy (2021), which aims to accelerate the phasing out of old and unfit vehicles. The Ministry of Environment, Forestry, and Climate Change (MoEFCC) also plans to release the End-of-Life Management Rules (draft released in 2024), which aim to provide a detailed framework for management of ELVs through an Extended Producer Responsibility (EPR) system. In lieu of this, automotive companies such as Tata Motors, Maruti Suzuki, and Mahindra have set up multiple Registered Vehicle Recycling Facilities (RVSFs) across India. 

Considering the EPR requirement in 2025 will require setting up 100+ RVSFs (annual capacity: 15000 vehicles, operating at 70% capacity). Currently, around 125 RVSFs are approved, of which only 65 RVSFs are operational. However, the current capacity utilisation of these RVSFs is low. Current challenges to the development of a robust formal ELV recycling ecosystem are the current dominance of the informal sector due to low awareness about RVSFs among vehicle owners and lack of incentives, the economic viability of the RVSFs due to fluctuating raw material prices and low levels of feedstock (end-of-life vehicles), the lack of a stringent regulatory framework, and supporting infrastructure such as Automated Vehicle Testing stations (ATS), vehicle collection centres, logistics etc.

Recommendations for accelerating the formal ELV recycling ecosystem in India

From the point of view of environmental impact and resource circularity, establishing a formal ELV recycling system in India is critical. However, to address the existing challenges, interventions are required in the following areas:

1. Regulatory framework and compliance: The draft End-of-Life Vehicles (Management) Rules 2024 should be implemented effectively, ensuring that vehicle manufacturers are held accountable for recycling targets and compliance with environmental standards. Similarly, to further encourage adherence, the government could introduce incentives to vehicle manufacturers who exceed recycling targets and penalties for those who fail to meet them. The government should also introduce policies that penalise organisations that do not follow the AIS-129 guidelines. This would help in creating a level playing field between the formal and the informal sector. The policy could also look at linking scrapping to pollution rather than age alone.
2. Public awareness and incentives:  The Government and vehicle manufacturers should jointly launch public awareness campaigns for vehicle owners highlighting the benefits of formal scrapping, such as financial incentives (discounts on new vehicle purchases, waived registration fees) and environmental protection. The vehicle manufacturers could use their existing customer touchpoints, such as new car dealerships, service centres etc to create awareness. Through road tax waivers, and discounts on new vehicle purchases, sufficient incentives should be provided to encourage customers to use RVSFs.
3. Infrastructure development: More RVSFs should be set up and existing RVSFs should be expanded to meet the recycling requirement. A network of collection centres should be established within a 50 km radius of RVSFs to facilitate the easy disposal of ELVs. State government could be involved to facilitate support in land acquisition. Existing dealers, service stations or scrap yards could be upgraded to act as collection centres. In addition, required ATS centres should be set up for vehicle testing. 
4. Integration of the informal sector: The government, along with vehicle manufacturers, should implement initiatives (in the form of training, financial support, and access to technology) to integrate the informal recyclers into the formal sector. This would enable improving overall recycling rates while ensuring compliance with environmental standards. 
5. Financial support: Registered vehicle registration facilities would require gap funding till they become financially viable. Vehicle manufacturers and philanthropic organisations could support these RVSFs for a pre-defined period with the required gap funding with clear guidelines, and deliverables for the RVSFs. Vehicle manufacturers to invest in the development of technologies that improve efficiency and recycling rates.
6. Robust monitoring mechanisms: Regulations should mandate that different stakeholders provide data on ELV recycling and recovery rates. This would enable tracking compliance as well as identifying improvement areas. Implementing digital tracking systems could enhance transparency in the recycling process. Such systems can monitor the flow of vehicles from collection points to dismantling facilities, ensuring that all steps are documented and compliant with regulations.

Accelerating the formal ELV recycling ecosystem in India would require interventions across regulatory frameworks, public awareness, infrastructure development, financial support and monitoring mechanisms. It would require collaborations between various entities such as national and state governments, vehicle manufacturers, RVSFs, and philanthropic and financial institutions.

If you would like to get in touch about any of the points raised in this piece or discuss how Xynteo can help your organisation, contact Vaibhav below.

–