Overview
India completed its first mandatory year of vehicle‑recycling obligations in FY26, but official data cited in a Press Trust of India (PTI) report (May 2026) show the automotive sector fell short of its steel‑recovery target by roughly 70 percent. The Environment Protection (End‑of‑Life Vehicles) Rules, 2025 were notified by the Ministry of Environment, Forest and Climate Change (MoEFCC) via S.O. 98(E) on 6 January 2025 and became effective on 1 April 2025. Under these rules, producers must recover a set weight of steel from scrapped vehicles based on a historical sales baseline, with the FY26 obligation defined as 8 percent of the steel equivalent of qualifying vehicles, using a 20‑year baseline for private (non‑transport) vehicles and a 15‑year baseline for commercial (transport) vehicles.
Compliance Shortfall
Only about 2.42 lakh vehicles were recorded as reaching registered scrapping centres in FY26, leaving a shortfall of roughly 5.2 lakh vehicles—approximately 70 percent of the required inflow. The shortfall is a supply issue, not a paperwork problem; a producer can purchase an EPR certificate only after a Registered Vehicle Scrapping Facility (RVSF) logs the recovered steel on the Central Pollution Control Board (CPCB) portal, which issues one kilogram of certificate per kilogram of steel. Vehicles processed by informal dismantlers generate no certificates.
Draft Amendment Impact
A draft amendment issued by MoEFCC on 27 March 2026 (still at draft stage) removed the provision that allowed “other steel scrap materials” to count toward EPR certificate generation. Consequently, only steel recovered directly from scrapped vehicles now qualifies. Most producers had planned FY26 around a mix of vehicle scrappage and qualifying industrial steel scrap; the amendment concentrates the full obligation onto a thin vehicle‑inflow pipeline, further widening the compliance gap.
Industry Capacity Constraints
As of January 2025, the Government reported only 84 operational Registered Vehicle Scrapping Facilities nationwide, an ecosystem still scaling toward sector needs. Meta Materials Circular Markets (MMCM), an Indian enviro‑tech firm, provides digital systems—such as the AutoLoop platform—that RVSFs use to log vehicle intake, perform VAHAN checks, and record depollution, dismantling and steel recovery against a 41‑point digital Measurement, Reporting and Verification (dMRV) framework aligned with AIS‑129. MMCM does not scrap or recycle vehicles; it captures the recovery data required for valid EPR certificates.
Financial and ESG Implications
The Society of Indian Automobile Manufacturers (SIAM) estimated a one‑time gross impact of around Rs 25,000 crore for FY2025‑26, with a lower figure on a discounted basis, driven by provisioning against past sales under Ind AS 37. Unmet obligations also trigger Environmental Compensation under the Rules, a charge designed to exceed the cost of compliance itself. Non‑compliance feeds into Business Responsibility and Sustainability Reporting (BRSR) disclosures mandated by SEBI and influences investor‑facing ESG assessments. SIAM has written to the Ministry seeking a phased transition rather than an exemption.
Stakeholder Submissions
Auto Recycling World (May 2026) submitted that automated testing stations are currently generating negligible ELV volumes and recommended that other automotive steel scrap be permitted in the initial years until the recycling ecosystem matures. The schedule of targets does not remain at 8 percent: it rises to 13 percent from FY31‑FY35 and to 18 percent from FY36 onward, meaning the current inflow gap will compound with each five‑year step if not addressed.
Path Forward
The lesson from FY26 is clear: until more end‑of‑life vehicles reach registered facilities, the statutory steel‑recovery targets will remain out of reach. Producers that source certificates year‑round directly from RVSFs are best positioned to close the gap.
Disclaimer: This press release is provided under an arrangement with NRDPL. PTI takes no editorial responsibility for the content.