India's ambitious end-of-life vehicle (ELV) rules have hit a major roadblock, with the auto sector struggling to comply and the FY26 scrap target missed by a staggering 70%. The policy, aimed at phasing out old and polluting vehicles, was expected to boost recycling and reduce emissions. However, industry stakeholders cite infrastructure gaps, high costs, and lack of awareness as key hurdles.
Policy Objectives and Implementation Challenges
The ELV rules, introduced to streamline the scrapping of vehicles older than 15-20 years, were designed to create a robust recycling ecosystem. Under the policy, registered vehicle scrapping facilities (RVSFs) were to be set up across the country. Yet, as of now, only a fraction of the required facilities are operational, leading to a massive shortfall in meeting the FY26 target of scrapping 1 crore vehicles.
Impact on the Auto Sector
The non-compliance has left automakers in a lurch. Original equipment manufacturers (OEMs) are required to ensure proper disposal of end-of-life vehicles, but the lack of adequate scrapping infrastructure has made this nearly impossible. Many OEMs have reported difficulties in setting up their own collection and recycling networks, citing high capital expenditure and logistical complexities.
Additionally, the informal sector, which handles a significant portion of vehicle scrapping, remains largely unregulated. This has led to environmental and safety concerns, as non-compliant scrapping methods release hazardous pollutants. The government had hoped to formalize this sector through the ELV policy, but progress has been slow.
Reasons Behind the Missed Target
Several factors have contributed to the 70% miss in the FY26 scrap target:
- Insufficient Infrastructure: As of early 2025, only 60 RVSFs are operational across India, far below the 300 needed to meet the target. The process of setting up these facilities involves multiple approvals and significant investment, deterring private players.
- Low Consumer Awareness: Many vehicle owners are unaware of the scrapping policy or the benefits of disposing of old vehicles through authorized channels. Incentives like scrap value and tax benefits have failed to attract enough participation.
- High Costs: The cost of scrapping a vehicle through formal channels is often higher than selling it to informal scrap dealers, discouraging compliance. Additionally, the transport of vehicles to RVSFs adds to the expense.
- Legal and Bureaucratic Hurdles: Delays in obtaining necessary clearances and lack of coordination between central and state agencies have hampered the rollout.
Industry Reactions and Way Forward
Industry bodies have urged the government to extend the deadline and provide financial incentives to boost infrastructure creation. The Society of Indian Automobile Manufacturers (SIAM) has proposed a phased approach, focusing on high-density regions first. Meanwhile, the Ministry of Road Transport and Highways is reviewing the policy and considering amendments to ease compliance.
Experts suggest that a combination of stricter enforcement, better incentives, and public-private partnerships could help revive the scrapping ecosystem. Without concerted efforts, India risks falling further behind on its environmental commitments and missing the long-term goals of reducing vehicular pollution and promoting a circular economy.
