Scrap or Sink: SIAM President Pushes for Bold Moves in Automotive Circular Economy

In a bid to reduce environmental footprint, strengthen economic resilience and global competitiveness, SIAM President Shailesh Chandra has outlined three specific interventions that he expects would promote a circular economy in the automotive industry — supportive policy framework to adopt bio-based and smart materials, incentives for vehicle scrapping and expansion of infrastructure for recycling.

“First, we need to have an appropriate policy framework, which would encourage OEMs to focus on the usage of smart and bio-based materials, high-quality technology, and efficient vehicle lifecycle management. Second, there is a need to have an incentive or disincentive-based mechanism, to encourage vehicle owners to scrap their end-of-life vehicles through RVSFs (Registered Vehicles Scrapping Facility),” Chandra said while speaking at the World Environment Days event organised by SIAM.

The Environment Protection (End-of-Life Vehicles) Rules, 2025, notified by the Ministry of Environment, Forest and Climate Change, now mandate producers to meet Extended Producer Responsibility (EPR) targets. These include the scrapping of vehicles introduced in the Indian market — including those used by the producers themselves — with annual targets beginning from 2025-26. 

For transport vehicles, the rule applies to those registered 15 years ago, and for non-transport vehicles, the threshold is 20 years. RVSFs are central to this ecosystem. They are tasked with receiving unfit vehicles and performing systematic depollution, dismantling, segregation, and scrapping. All materials recovered must then be sent to registered recyclers, refurbishers, or co-processors for further use, unless the RVSF itself has the capacity for recycling or refurbishing.

To accelerate this transition, the Ministry of Road Transport and Highways has put in place the Vehicle Scrapping Policy, which promotes the phasing out of unfit and polluting vehicles based on their fitness. As of January 2025, India has around 125 approved RVSFs of which 65 are operational across the country. There are estimated 162 approved automated testing stations, with 23 confirmed operational.

To make scrapping more attractive, the Ministry of Road Transport and Highways provides motor vehicle tax concessions — up to 25% for non-transport vehicles and up to 15% for transport vehicles — for those buying a new vehicle against a valid ‘Certificate of Deposit’ obtained after scrapping an old vehicle.

With over 2 crore vehicles nearing end-of-life in India, Chandra stressed the importance of scaling up recycling infrastructure and ensuring the use of environmentally sound technologies. “Third, considering the number of total end-of-life vehicles, it is imperative to further strengthen the recycling infrastructure equipped with environmental sound technologies,” he said.

Chandra also recommended a joint awareness campaign by the industry and government to educate end-of-life vehicle owners about the benefits of sustainable scrapping practices and the role of RVSFs.