The Aakhya Weekly #130 | Responsible Recycling: Giving Cars a Second Life
In Focus: A Step Towards Eco-Conscious Recycling of ELVs
by Mohini Tiwari
In an era where sustainability has become a global imperative, concepts linked to circular economy offer a revolutionary approach to resource management and environmental conservation. By extending the lifecycle of materials and reducing waste, the circular economy addresses pressing ecological challenges and paves the way for economic growth and innovation.
India’s automotive industry, a cornerstone of its economy, is at the cusp of a transformative shift. With a staggering 29.5 crore vehicles currently on the roads and an additional 2 crore vehicles joining annually, the nation is experiencing an unprecedented surge in vehicular ownership. However, this rapid expansion comes with challenges, notably, managing end-of-life vehicles (ELVs)—a growing environmental and economic concern. ELVs, including those no longer roadworthy or have been voluntarily retired, are poised to exceed 2 crore units by this year. Alarmingly, these outdated vehicles contribute nearly eight times more pollution than their modern counterparts.
Various states in India have recognised the urgency of addressing the ELV challenge and have set timelines for phasing out older vehicles. For instance, Delhi has banned diesel vehicles older than 10 years and petrol vehicles over 15 years, with hefty penalties for non-compliance. Maharashtra’s scrappage policy targets phasing out 15-year-old commercial vehicles to improve air quality. Telangana’s vehicle scrapping initiative promotes sustainability by offering tax incentives. Similarly, Karnataka plans to phase out old diesel vehicles and mandates retrofitting to meet emission standards. These state-level policies could reduce pollution, bring investments in cleaner vehicle technologies, and bolster the circular economy. However, the existing ELV ecosystem remains fragmented, largely dominated by informal practices that fall short of efficiency, safety, and environmental compliance standards. Addressing these gaps will require a concerted effort involving the government, Original Equipment Manufacturers (OEMs), recyclers, and consumers.
Current Scenario in India
India ranks as the fourth largest automotive market globally, reflecting a booming interest in motor vehicles among its citizens. However, vehicle ownership carries both sentimental and utilitarian value for consumers, presenting unique challenges, often resulting in old vehicles being funnelled into unorganised scrap markets.
A staggering 75% ELVs are processed through the informal sector, leading to significant issues like traffic congestion and environmental degradation. Characterised by health risks and environmental hazards, informal recycling operations are not designed to manage the challenges presented by modern waste management needs. This deficiency has resulted in inefficient scrapping processes, contributing to potential material loss, compounded by soaring prices of raw materials. The rise in material costs and semiconductor components shortage caused a shortfall of 7.7 million vehicles in 2021, causing revenue losses of approximately $210 billion.
As the influx of ELVs is expected to rise in the coming years due to new regulations, the challenges associated with safe and efficient dismantling will intensify for all stakeholders. In response, the Indian government has launched several initiatives to establish a more robust formal ELV recycling ecosystem, prompting companies like Tata Motors, Maruti Suzuki, and Mahindra to set up multiple Registered Vehicle Recycling Facilities (RVSFs) across India. While these initiatives are promising, they remain in their early stages and face challenges in scaling operations to meet future demand.
Policy Landscape
Introduced in 2021, the Vehicle Scrappage Policy, aimed to establish an organised framework for the disposal of ELVs while ensuring environmental sustainability and promoting economic benefits. It mandates rigorous fitness testing for vehicles at Automated Testing Stations and includes penalty provisions, requiring renewal of fitness certificates every 10 and 15 years for commercial and personal vehicles, respectively. The policy offers tax rebates on new vehicle purchases, discounts from manufacturers, and waivers on registration fees, encouraging the scrapping of old vehicles. This is expected to drive the adoption of fuel-efficient and environmentally friendly vehicles while addressing the issues posed by outdated models. It further intends to crack down on the informal recycling sector by establishing certified scrappage centres and promoting material recovery through advanced recycling methods, reducing waste and boosting the circular economy. Moreover, the scrappage ecosystem encourages partnerships with private players and state governments to establish Registered Vehicle Scrapping Facilities (RVSFs) across the country.
Draft ELV Management Rules (2024)
To complement the scrappage policy and address its limitations, the Ministry of Environment, Forest and Climate Change (MoEFCC) introduced a comprehensive framework through the Draft End-of-Life Vehicles (Management) Rules, 2024, fulfilling the gaps by mandating compliance with strict environmental and safety guidelines for authorised facilities. This legislative initiative marks a significant step towards transparent, safe, systematic, and environmentally friendly management of ELVs while defining clear responsibilities for various stakeholders in the automotive sector.
What do the Rules Entail?
Responsibilities of the Producer: Producers are responsible for fulfilling EPR by ensuring that vehicles introduced into the market meet scrapping targets and are deposited at RVSFs or designated Collection Centres. They must encourage sustainable practices through schemes like buy-back or deposit refunds and comply with Automotive Industry Guidelines (AIS-129) guidelines.
Responsibilities of Registered Owners and Bulk Consumers: They must ensure their vehicles’ fitness through tests under applicable laws. Once marked as ELVs, they must be deposited at a producer’s designated outlet, Collection Centre, or RVSF within 180 days. Bulk consumers are required to register on a centralised portal.
Responsibilities of Collection Centres: They must handle ELVs in an environmentally sound manner, and maintain detailed records and tracking of all processes.
Responsibilities of Automated Testing Stations: They must maintain records of vehicles declared unfit under the relevant law, on a centralised online portal.
Responsibilities of Registered Vehicle Scrapping Facilities (RVSFs): Their responsibilities include de-pollution, dismantling, safe storage, and recycling or refurbishing of materials like plastics, metals, tyres, and batteries. RVSFs must ensure all recovered materials are sent to authorised recyclers, refurbishers, or hazardous waste facilities while maintaining detailed records. They must exchange EPR certificates for steel recovery via a centralised portal.
Extended Producer Responsibility (EPR) Certificates: They are issued by the Central Board based on the steel recovered from ELVs processed at RVSFs. These certificates allow producers to fulfil their EPR obligations. They are valid for five years and are generated and tracked using a formula based on the weight of steel scrap.
Environmental Compensation: Producers, RVSFs, and bulk consumers who fail to manage and scrap ELVs per the guidelines, are required to pay environmental compensation. The amount is determined based on the extent of damage. If compliance is achieved within a specific timeline, a portion of the compensation may be refunded.
Centralised Online Portal: The Central Board will establish a centralised online portal to facilitate compliance with these rules. It will serve as a single-point data repository, reflecting real-time information on ELV receipt, waste materials, and obligations.
Implementation Committee: To oversee effective implementation, the Central Government may form an Implementation Committee to monitor rule compliance, guide the development and operation of the online portal, and take necessary measures for enforcement.
Recommendations
Leverage Informal Players as Intermediaries: Integrating informal recyclers as intermediaries will ensure a steady flow of materials and help formalise the recycling process.
Transition to Certified Aggregators: Certification programs for informal players, inspired by the e-waste sector, can enable them to access larger markets and financial support. This can help them expand operations and integrate seamlessly with formal recycling chains.
Skill Development Programs by NSDC: Tailored programs by the National Skill Development Corporation (NSDC) can help workers in the ELV sector acquire standardised skills through certification programs in vehicle dismantling, recycling, and hazardous waste management.
Awareness Campaigns: Public education on the benefits of responsible ELV disposal can increase participation in formal recycling practices.
Strengthening EPR Incentives and Penalties: Financial incentives for manufacturers meeting recycling targets and penalties for non-compliance with environmental standards will encourage adherence to the rules.
Promoting Research and Development: Collaborations with academic institutions and technological firms to innovate recycling technologies will improve material recovery rates, reduce environmental impact, and establish India as a leader in sustainable ELV recycling practices.
Way Ahead
The current draft, which invites objections and suggestions from the public, will remain open for feedback for sixty days from the date the Gazette containing the proposed provisions was made available. If no suggestions are received, the provisions will come into effect on the 1st of April, 2025. This initiative holds significant promise in accelerating materials recycling from ELVs and addressing the long-standing challenge of building a circular economy in India's automotive sector. The success of this paradigm hinges on the successful integration of the formal and informal sectors, which would help formalise the recycling process and create a mutually beneficial system. The informal sector, with its access to 95% of the waste market, would gain from infrastructure and financial support, and the formal sector would gain access to a larger market, driving collective growth and sustainability in the industry.
Top Stories of the Week
ECI Mandates Labeling of AI-Generated Campaign Materials
The Election Commission of India (ECI) issued an advisory to political parties to ensure transparency in procedures for using Artificial Intelligence (AI)-generated content during political campaigns. The advisory emphasises two key actions: first, it mandates that all AI-generated or significantly altered content must be clearly labelled with terms such as "AI-generated," "Digitally Enhanced," or "Synthetic Content." Second, political parties are urged to include disclaimers in all campaign advertisements and promotional materials, whether online or offline, whenever synthetic content is used.
During the 2024 Lok Sabha elections, the ECI had already implemented guidelines to curb the proliferation of AI-generated distorted content, including "deepfakes," during the Model Code of Conduct (MCC) period. These efforts were introduced to counter the virality of misinformation, disinformation, and manipulated narratives. Chief Election Commissioner Rajiv Kumar has repeatedly highlighted the risks posed by AI and deep fakes in amplifying misinformation. In a recent press conference on the Delhi Legislative Assembly elections, the CEC directed authorities to remain vigilant against misinformation and take swift action to preserve trust in electoral processes.
Maharashtra's Plan: Congestion Fees and Ownership Limits
The Maharashtra government is taking significant steps to combat persistent traffic congestion and pollution in Mumbai by proposing congestion taxes and vehicle ownership restrictions. These measures aim to introduce heavy congestion taxes in key business districts and limit the number of cars owned by households. The proposed plan includes mandating motor vehicle buyers to obtain a certified parking area (CPA) before registration, enhancing the state's efforts to ensure new vehicles have an allocated space, thus alleviating parking problems.
Department officials suggest that such strategies, inspired by global models in Japan, and cities like London and Singapore, could effectively regulate vehicle population and reduce congestion. The government will convene with key stakeholders, including manufacturers, motorists and the Departments of Transport, Urban Development, and Industries, respectively, to deliberate on the proposal's features. However, the plan may face pushback from car manufacturers and residents concerned about the availability of public transportation alternatives. The success of these proposals hinges on the government’s commitment to developing an efficient public transport system alongside these restrictions.
A Few Good Reads
Sana Hashmi examines the perception of QUAD by nations in the Indo-Pacific and the potential pressure it may come under due to the upcoming Trump Presidency.
Rajan Kumar opines that President-elect Donald Trump's ambitions to acquire territories like Greenland reflect a resurgence of American imperialism, disregarding the sovereignty of countries and potentially encouraging similar aggressive actions by other global powers.
Abhishek Anand, Josh Felman, and Arvind Subramanian argue the RBI's dollar peg aimed to stabilise borrowing costs but caused economic challenges, highlighting that "short-term fixes create long-term issues.
Sam Winter-Levy explains the AI diffusion framework and highlights the US’s ambition to control the global spread of AI through export controls.
Amit Kapoor emphasises the urgent need for India to adopt sustainable groundwater management practices in agriculture to preserve water resources and ensure long-term agricultural productivity.
Second Opinion
Policy Musings with Sunil Dahiya, Founder, EnviroCatalysts
Tackling Air Pollution in Delhi and Beyond – Actionable Solutions
Air pollution continues to be a crisis that affects millions, with cities like Delhi facing some of the most severe challenges. In this episode of Policy Musings, Sunil Dahiya shares actionable solutions that can help tackle this urgent issue—both in Delhi and beyond.
We explore why current policies aren’t enough, learn from international successes, and uncover how public behaviour shifts, simple actions, and economic incentives can make a big difference. The solutions are closer than we think.
Be part of the movement for a cleaner, healthier tomorrow.
Watch now onYouTube: https://lnkd.in/gXAdZTWw
Learn more about EnviroCatalysts here: www.envirocatalysts.com