India sets producer responsibility target for ELV sector. Will scrap generation get a boost?
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- EPR on ELVs set at 8% for auto sector majors
- Cost, infrastructure problems remain pressing industry concerns
- 5-6 mnt of additional domestic scrap to be generated between 2025-30
Morning Brief: In a major boost to scrap generation and the domestic vehicle recycling ecosystem, the government has promulgated an 8% threshold as part of the extended producer responsibility (EPR) for auto majors to ensure recycled content in their products.
This threshold is bound to extend, as envisaged in the government's vision, to allow for extensive usage of recycled metals in key consumer products.
EPR's impact on auto industry
Automakers must innovate to achieve EPR's steel recycling targets. They are required to implement buy-back programs, raise consumer awareness, and register their activities on the CPCB's central portal. The regulations also extend to bulk consumers and vehicle owners, promoting sustainable disposal of end-of-life vehicles.
Recycling infrastructure expansion
India is advancing steadily in developing its vehicle recycling infrastructure. At present, 79 Registered Vehicle Scrapping Facilities (RVSFs) are fully operational, with an additional 59 facilities approved but not yet functional. This brings the total count of RVSFs under the Vahan Voluntary Vehicle Scrapping initiative to 138.
Government initiatives and domestic scrap growth
The Steel Scrap Recycling Policy of 2019 and the subsequent Vehicle Scrappage Policy have turned domestic scrap into an opportunity. The government's push will fuel India's transition to a self-sustaining scrap steel economy.
EPR policy notification on ELVs
The government has introduced the Environment Protection (End-of-Life Vehicles) Rules, 2025, which will come into effect from 1 April, 2025. This policy, a part of India's broader sustainable development and circular economy efforts, introduces Extended Producer Responsibility (EPR) for vehicle manufacturers. The focus is on recycling steel from End-of-Life Vehicles (ELVs), reducing environmental impact, and promoting resource efficiency while aligning the Indian automotive industry with global sustainability standards.
The key features of the policy under the mandated recycling targets
Non-transport vehicles:
- 2025-2030: 8% of steel from vehicles manufactured 20 years ago.
- 2030-2035: 13%.
- 2035 onwards: 18%.
Transport vehicles:
The same targets apply, with timelines based on vehicles manufactured 15 years ago.
Carry forward flexibility: Manufacturers can carry forward up to 30% of unmet EPR targets to the next four years, ensuring flexibility and accountability.
Improved recycling infrastructure:
The policy encourages advanced recycling facilities and partnerships between OEMs and recyclers for proper ELV dismantling and processing.
Standardised recycling process:
Recycling must follow international waste management standards to ensure environmental responsibility. A robust system will track progress, with penalties for non-compliance.
Challenges
1. Cost implications: Manufacturers are concerned about the additional cost burden associated with meeting the recycling targets, particularly in the early phases.
2. Recycling infrastructure gaps: Industry stakeholders highlight the need for more recycling plants and standardized protocols to handle the anticipated increase in ELVs.
3. Market impact: The policy is expected to stabilise scrap steel prices by increasing domestic supply, benefiting industries dependent on recycled materials.
Industry insights
A representative from a north India-based ELV recycler stated that the EPR guidelines will provide the necessary support to the ELV policy. The 8% target for India seems practical, and the impact on the two-wheeler segment will be interesting to observe. He noted that ELV dismantling centers are likely to see substantial growth, which will drive expansion in this segment across India.
A representative from a western India ELV recycler mentioned that manufacturers who produced transport and non-transport vehicles 15 and 20 years ago, respectively, will be responsible for recycling the steel. This approach is expected to progressively increase vehicle scrappage rates across the country.
Environmental Protection Rules 2025 and the EPR Draft
During a recent discussion in Leveraging the potential of Carbon trading and renewable energy in India's steel industry at AISC 2.0, Yashodhan Ramteke, AVP at Meta Materials Circular Markets, highlighted the forthcoming Environmental Protection Rules (EPR) for End-of-Life Vehicles (ELVs), scheduled for implementation in 2025.
After extensive discussions, a draft on EPR for ELVs was released, setting a target for vehicle manufacturers to recover steel from vehicles produced 15-20 years ago. The goal for the next five years is for manufacturers to use 8% steel from ELVs in new vehicle production, which equates to approximately 3.5 million tonnes of recycled steel.
Ramteke also emphasised that in Chhattisgarh, two RVSFs are operational, while nationwide, more than 75 RVSFs are already functional. It is expected that the number of operational RVSFs in India will grow to 1,000 in the coming years.
Domestic scrap market and imports
Sanjay Mehta President MRAI contributed to the discussion by noting that, despite an ongoing import dependency of around 8-9 million tonnes, the domestic scrap market is gradually gaining strength, driven by recent government policies. Scrap usage is a crucial factor in reducing carbon emissions, and thus, imports are unlikely to rise sharply, as domestic scrap generation is expected to improve.
The government has been proactively working on streamlining domestic scrap generation over the last decade, with a series of policies aimed at promoting the recycling industry. Looking at global patterns of ferrous scrap export bans, it is anticipated that India will rely more heavily on domestic scrap in the future, particularly high-quality materials.
Scrap consumption outlook
Scrap consumption is expected to rise as blast furnace (BF) route steel manufacturers increase their usage. Currently, the scrap usage in BFs is around 5%, but this figure is expected to grow to 8-10% in the future. Globally, BFs typically use around 25% scrap, but India will take time to catch up. By 2047, it is anticipated that India will use around 50% scrap in BF mills.
A significant gap exists between scrap consumption and generation in India. This gap is reflected in import volumes. However, with upcoming infrastructure projects and the recycling of old properties, India is likely to see a rise in domestic scrap generation. Between 2025 and 2030, the country is expected to generate an additional 5-6 million tonnes of scrap, supporting the growth of the domestic scrap market.
The EPR for ELVs represents a crucial step toward sustainable practices in India's automotive sector. Though challenges remain regarding implementation and infrastructure development, the policy lays a solid foundation for enhancing resource efficiency, reducing reliance on virgin raw materials, and protecting the environment. The focus on recycling aligns with India's broader goals of achieving a circular economy and net zero emissions.
The policy also positions the steel industry as a key player in India's sustainability journey, setting ambitious targets for OEMs and Registered Vehicle Scrapping Facilities (RVSFs) to ensure the circulation of steel from vehicles sold 15-20 years ago.
