With over 295 million vehicles currently navigating Indian roads and an estimated 20 million being added annually, managing end-of-life vehicles has never been more urgent. With sustainability having become a priority for India, circular economy principles of reuse and recycle have gained traction. Recognising this urgency, the Ministry of Environment, Forest and Climate Change introduced the Draft End-of-Life Vehicles (Management) Rules, 2024, in January last year. These rules aim to ensure the environmentally responsible disposal of ELVs through a structured Extended Producer Responsibility (EPR) framework. 

Under this framework, vehicle producers, including importers, are mandated to ensure the scrapping of ELVs at authorized Registered Vehicle Scrapping Facilities (RVSFs). According to industry experts, the convergence of two policy frameworks—the operationalization of RVSFs and the introduction of EPR obligations for OEMs—holds immense potential. While the vehicle scrappage policy was already in place, the EPR framework, which came into effect from April 2025, finally brings automakers into the core of India's recycling value chain.

The future of automobile recycling system 

The Indian automobile recycling systems have not evolved in tandem with the growth of the automotive industry. Most of the ELVs find their way to unorganised scrap handling markets, impacting the surrounding environment. According to the Society of Indian Automobile Manufacturers (SIAM), the country is projected to have 22.5 million ELVs by 2025. These vehicles could yield nearly 5 million tonnes of steel scrap, 1.2 million tonnes of aluminium, and 0.2 million tonnes of copper—presenting significant opportunities for recycling, remanufacturing, and reuse.

SIAM estimates that integrating these materials into formal recycling systems could improve value chain profitability by up to 1.5 times.  

Sumit Issar, Managing Director of Mahindra Accelo Ltd, observed, “Integrating OEMs into the recycling ecosystem through EPR will significantly scale up and amplify the recycling industry’s impact. By incentivising customers to scrap their vehicles responsibly, OEMs complement and strengthen the benefits offered under the Vehicle Scrappage Policy.” Issar noted that incentives under the EPR and scrappage policy could offer customers ₹1–1.25 lakh in benefits on a ₹20 lakh vehicle. 

“This, combined with the use of newer, less polluting vehicles, will enable a cleaner, safer automotive landscape in the long run,” he noted. The EPR framework mandates vehicle manufacturers to meet recycling targets, beginning with a minimum of 8% steel recycling in 2025–26. 

The framework sets progressive recycling targets: 8% steel usage from ELVs in the first five years, rising to 13% and 18% in the subsequent five-year periods. For passenger vehicles over 20 years old and commercial vehicles over 15 years old, this translates into a target of approximately 2.4 lakh tonnes of recycled steel annually—or about 3.3 lakh vehicles to be scrapped each year. 

“This will go a long way in reducing vehicular pollution. Old vehicles emit up to 10 times more pollution compared to new ones,” Issar added, emphasising the policy’s environmental importance.  

Issar highlighted that much depends on the efficiency of policy implementation. “Certain operational details—like EPR certificate registration, transaction protocols, and environmental compensation for non-compliance—are still awaited. These aspects are under discussion with MoEFCC, the Central Pollution Control Board (CPCB), and SIAM.”

He added, “The biggest advantage of EPR is that it will channelise ELVs through formal RVSFs. But we need policy and system amendments to increase the flow of vehicles to these facilities to ensure an adequate supply of EPR certificates.”

In the organised vehicle recycling space, CERO has taken the first step back in 2016 by setting up India’s first organized vehicle recycling facility. CERO is a JV between Mahindra Accelo and MSTC Ltd. (a GoI enterprise) and aims to achieve ‘ZERO’ waste in recycling vehicles. Today, CERO has the largest network of vehicle recycling facilities across India.

Currently, India has about 140 approved RVSFs, of which nearly 90 are operational. CERO, with facilities in over 40 cities, plans to expand to 100 locations. “Capacity is not the issue. What’s needed is strict implementation and increased awareness to drive vehicles into the formal recycling ecosystem,” he stressed. 

Issar remained optimistic. “The entire ecosystem is gradually aligning. This policy will benefit all stakeholders—customers, the government, OEMs, and recyclers.” 

CERO has also leveraged technology to provide a hassle free and digital experience to its customers, he noted, explaining, “However, more clarity on environmental compensation, transaction process and audit will help OEMs and RVSFs to formulate strategies better. However we expect that these issues will be streamlined in the near future.” 

Issar emphasized that all the RVSFs should be audited at regular intervals to ensure adherence to rules and regulations which are prescribed by the government.  

A study by Centre for Science and Environment (CSE) indicates that over 8.7 million ageing vehicles are responsible for 75% of vehicular pollution in India. “Getting these vehicles off road through ELV policy would significantly reduce PM2.5 and PM10 levels,” said Jagdish Prasad, Vice President, MTC Group. He further highlighted that ELV rules will not only reduce the dependency on virgin raw materials, and minimize environmental degradation associated with mining and processing of raw materials but also would encourage innovation in sustainable product design and eventually reduce recycling costs.  

As India remains a scrap-deficit country, domestic generation of recycled materials through vehicle circularity will provide a much-needed boost to industries such as steel and aluminium, he pointed out. 

Challenges and opportunities

Speaking about the opportunities, Jagdish said: “EPR certificates can only be generated through authorized RVSFs. Traceability of the materials flow, environment friendly vehicle scrapping and value generation to old car owners are some of the key advantages of EPR policy. This policy will also push informal players to formalize operations and contribute directly to India’s GDP.”

Still, challenges remain, he acknowledged.  “EPR rates are yet to be defined. Considering the rising demand, the number of RVSFs is still insufficient,” he pointed out, adding, “Policy implementation across states is awaited.” Government bodies are continuing to engage stakeholders and refine policy details to ensure effective rollout. He expressed confidence that the policy would serve as a key driver of value creation for automakers and recyclers alike.

Readiness of automakers

While automakers and recyclers are broadly prepared, some key issues persist—chief among them are the sourcing of ELVs, price determination of EPR, and integration of digital systems. These gaps are to be addressed for smooth implementation of this policy, he remarked. 

Raising public awareness remains a fundamental need. Outside major metro cities, knowledge of the ELV policy and its benefits remains limited. “People still turn to informal channels for scrapping their vehicles, undermining the policy’s potential,” Jagdish underscored. 

The ELV policy offers ELV owners several benefits—including deregistration support, discounts on new vehicles, road tax waivers, and potential gains from carbon credits and EPR schemes. “The government has crafted this policy to reward those who embrace sustainable, environmentally friendly recycling practices. Automakers, car owners, recyclers, and government agencies all stand to gain,” he highlighted. 

Sanjay Pendharkar, Business Consultant – Construction, Earthmoving, and Sales Management, added: “The End-of-Life Vehicles Rules, 2025, are a significant step towards sustainable practices. But setting up an EPR framework presents challenges—OEMs must redesign supply chains, invest in recyclable materials, and absorb compliance costs. Market readiness remains uneven, with limited awareness and inadequate infrastructure.”

However, Pendharkar saw potential: “Despite hurdles, these rules can drive innovation, job creation, and resource efficiency. With the right incentives, robust infrastructure, and strategic awareness campaigns, India can align producers and consumers with the vision of a circular economy.”