ELV rules leave auto industry struggling to meet scrappage targets
India’s auto industry missed FY26 vehicle scrappage targets by 70 per cent under the Environment Protection Rules, 2025. Industry executives blamed unrealistic policy measures and limited ELV availability, while SIAM urged the government to allow other steel scrap materials for compliance
New Delhi: Auto companies in India fell short by 70 per cent in meeting the steel-equivalent vehicle scrapping commitments in FY26 set under the environment ministry’s end-of-life vehicle rules, even as industry executives blamed an ‘unrealistic policy’ for making the entire sector non-compliant.
The Ministry of Environment, Forest and Climate Change notified the Environment Protection (End-of-Life Vehicle) Rules, 2025, in January last year, and they came into effect on April 1, 2025.
It required automakers to meet extended producer responsibility (EPR) obligations on the basis of the weight of steel recovered from the scrappage of end-of-life vehicles (ELVs) or other steel scrap materials processed at registered scrapping facilities.
However, a draft amendment to the notification issued by the ministry on March 27, 2026, removed the provision of ‘other steel scrap materials’ for the issuance of the EPR certificate, mandating that only steel generated from scrapped vehicles be counted for certification.
The rule requires manufacturers to scrap ELVs sold in the domestic market 15 years earlier for private vehicles and 20 years earlier for commercial vehicles to get the EPR certificate.
According to the rule, in FY26, manufacturers had to scrap a minimum of 8 per cent of the steel equivalent of vehicles sold in FY2005-06 (for private vehicles) and FY2010-11 (for commercial vehicles). It translated into a total of 95.2 lakh vehicles eligible for a fitness test in 2025-26, out of which 7.62 lakh were required to be scrapped in order to meet the 8 per cent target.
“The actual old vehicles received for scrapping at scrappage centres were just 2.42 lakh in FY26, and there was a shortfall of 5.2 lakh vehicles,” an industry executive said on condition of anonymity, citing official data.
“So, for the entire auto industry, there was a shortfall of 70 per cent,” the executive said.
What made the condition worse for the auto industry in meeting the EPR obligation was the prohibition on counting ‘other steel scrap materials’ in the March 2026 amendment to the rule, another industry official said.
“Most OEMs had planned to meet targets with both vehicle scrapping and steel scrap from other sources. However, after the removal of that clause, meeting these targets has become nearly impossible,” lamented the executive.
Stating that the “policy is unrealistic”, another industry executive said, “This has resulted in the auto industry falling way short of the target set for scrappage. As such, there were not many ELVs coming to scrapping centres.”
Auto industry body Society of Indian Automobile Manufacturers (SIAM) had also written to the ministry, raising concerns over the limited availability of ELVs for meeting EPR targets.
Besides, SIAM had also highlighted to the ministry that automated testing stations were generating negligible ELV volumes, while urging it to allow the use of other automotive steel scrap for EPR compliance in the initial years with a phased transition framework until the ELV ecosystem matures.
Another industry executive said the shortfall in EPR targets can only be addressed by using “other steel scrap materials” besides old vehicles, as after every five-year cycle, the shortfall will increase.
The 8 per cent target continues for five years till 2029-30, and then increases to 13 per cent for the period 2030-31 to 2034-35 and 18 per cent for 2035-36 onwards, the executive said, while advocating a relook at the policy.
