With over two crore vehicles in India nearing the end of their operational life, the automotive industry urgently requires specific interventions to foster a circular economy, according to the Society of Indian Automobile Manufacturers (SIAM).

On Thursday, SIAM highlighted three crucial areas for action: a supportive policy framework for adopting bio-based and smart materials, incentives for vehicle scrapping, and an expanded recycling infrastructure. Speaking at the World Environment Day event, themed ‘Revolutionising mobility: Driving the Automotive Industry Towards a Clean and Circular Future,’ Shailesh Chandra, President of SIAM, further emphasised these points.

“First, we need to have an appropriate policy framework, which would encourage OEMs (original equipment manufacturers) 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 registered vehicle scrapping facilities (RVSFs),” he said.

He also advocated for a joint awareness campaign by the government and the industry to educate vehicle owners about end-of-life vehicles and the benefits of sustainable scrapping practices.

Chandra noted that as of January this year, India had 125 approved RVSFs, with approximately 65 of them operational across the country. He added that there are an estimated 162 approved automated testing stations, with 23 confirmed as operational, a number expected to grow as more States implement their plans.

Forest and Climate Change’s Environment Protection (End-of-Life Vehicles) Rules, 2025 by the Ministry of Environment, mandate OEMs to meet extended producer responsibility (EPR) targets. These targets, commencing from the 2025-26 fiscal year, include the scrapping of vehicles introduced into the domestic market, even those used by the manufacturers themselves. The rules apply to transport vehicles registered 15 years ago and non-transport vehicles (such as construction equipment) exceeding 20 years of age.

To further incentivise vehicle owners, the Ministry of Road Transport and Highways (MoRTH) offers motor vehicle tax concessions. Owners can receive up to 25 per cent reduction for non-transport vehicles and up to 15 per cent reduction for transport vehicles when purchasing a new vehicle against a valid ‘Certificate of Deposit’ obtained from an authorised scrapping centre after their old vehicle has been scrapped. Additionally, some OEMs provide further discounts to customers who purchase new vehicles after scrapping old ones and presenting this ‘Certificate of Deposit.’

Published on June 5, 2025