End of Life Vehicles (ELV): Challenge for India

India’s End of Life Vehicles (ELV) challenge requires building a circular economy for sustainable mobility. Read here to learn more.

India’s rapid motorisation, while boosting economic mobility, is generating a silent environmental and safety crisis. A recent NITI Aayog report titled “Enhancing Circular Economy of End of Life Vehicles (ELVs) in India” warns that the number of ELVs could nearly double from 23 million in 2025 to about 50 million by 2030.

If left unmanaged, this surge could aggravate urban air pollution, road safety risks, resource wastage, and informal-sector environmental hazards.

The report underscores that transitioning to a circular economy for ELVs is no longer optional but central to India’s climate, resource security, and industrial policy goals.

What are End of Life Vehicles (ELVs)?

End of Life Vehicles (ELVs) are vehicles that are:

• No longer roadworthy,
• Invalidly registered or failed fitness tests, or
• Voluntarily declared as waste by owners.

ELVs contain valuable recoverable materials such as steel, aluminium, copper, plastics, rubber, and glass, but also hazardous substances like oils, coolants, batteries, and asbestos.

Scientific dismantling enables resource recovery, while unscientific scrapping poses severe pollution and health risks.

Key Trends and Data Highlighted in the Report

1. Rapid Growth in ELV Stock

• ELVs expected to rise from 23 million (2025) to 50 million by 2030.
• Driven by ageing vehicle fleets, stricter fitness norms, and rising vehicle ownership.

2. High Pollution Load

• Older BS-I vehicles emit up to eight times more pollutants than BS-VI vehicles.
• Continued use of unfit vehicles undermines India’s air-quality targets.

3. Enormous Resource Recovery Potential

• Vehicles manufactured between 2005 and 2023 can yield ~98 million tonnes of recoverable steel
• Reduces dependence on imported scrap and lowers emissions from primary steelmaking.

4. Infrastructure Deficit

• India needs ~500 Automated Testing Stations (ATS) by 2027.
• As of September 2025, only 156 ATS are operational.

5. Dominance of the Informal Sector

• Informal sector processes 2-3 lakh ELVs annually.
• Formal Registered Vehicle Scrapping Facilities (RVSFs) handled only 72,000 vehicles in FY 2024-25, reflecting severe underutilisation.

Regulatory Landscape for ELV Management in India

1. Voluntary Vehicle-Fleet Modernisation Programme (2021)

• Mandatory fitness testing:
  • Private vehicles >20 years
  • Commercial vehicles >15 years

2. Motor Vehicles (RVSF) Rules, 2021

• Established Registered Vehicle Scrapping Facilities.
• Introduced Certificate of Deposit (CoD), enabling incentives like:
  • Road tax rebate
  • Registration fee waiver for new vehicles

3. Extended Producer Responsibility (EPR) Rules, 2025

• OEMs are mandated to meet steel recovery targets 8% during 2025-2030, rising progressively thereafter.

4. Mandatory ATS-Based Fitness Testing

• From October 2024, all transport vehicles must undergo fitness testing only through ATS, limiting manual discretion.

5. Incentives for States (SASCI Scheme)

• Over ₹2,000 crore provided to states for:
  • ATS establishment
  • Vehicle scrapping ecosystem support

Challenges in Implementing a Circular ELV Ecosystem

1. Price Differential Favouring Informal Scrappers

• Informal operators evade:
  • GST
  • Environmental compliance
  • Labour norms
• Example:
  • An informal buyer offers ₹38,000 for a Dzire-class car.
  • Formal RVSF can pay only ₹23,000, ₹15,000 incentive to choose informal scrapping.

2. Regional Infrastructure Imbalance

• ATS and RVSFs clustered in select states.
• Example:
  • Gujarat: ~56 ATS
  • Sikkim, Arunachal Pradesh: negligible or no facilities
• Distance and access barriers push owners toward informal routes.

3. Procedural Bottlenecks in De-registration

• Paper-heavy and physical verification processes.
• No penalty for failing to de-register scrapped vehicles.
• “Ghost vehicles” remain active on the VAHAN database, distorting records.

4. Weak Financial Viability of Formal Facilities

• High capital expenditure and low vehicle inflow.
• Example: <20% capacity utilisation, break-even period close to 10 years for RVSFs.

5. Compromised Testing Integrity

• Intermediaries and corruption dilute ATS effectiveness.
• Example: Fitness certificates issued without vehicle presence for unofficial premiums.

NITI Aayog’s Key Recommendations

1. Infrastructure Expansion

• Target one ATS per district.
• PSU-led or state-supported RVSFs in commercially unviable regions.

2. Formalisation of the Informal Sector

• Integrate informal dismantlers via the Udyam Assist Platform.
• One-time waiver for legacy environmental violations to enable transition.

3. Strengthening EPR Framework

• Gradually increase steel recovery targets to 35% by 2035.
• Prevent OEMs from meeting targets using production scrap instead of ELVs.

4. Digital and Process Reforms

• Aadhaar-linked ownership transfer.
• De-registration only after submission of a valid Certificate of Deposit (CoD).

5. Financial Innovation

• Enable carbon credits from formal scrapping.
• Potential additional revenue of ₹2,000 per vehicle, improving RVSF viability.

Significance of ELV management

• Climate Goals: Reduce emissions from steel production and old polluting vehicles.
• Resource Security: Enhances domestic scrap availability, supporting Make in India.
• Urban Safety: Removes unsafe vehicles from roads.
• Formal Employment: Creates green jobs in dismantling, recycling, and logistics.
• Ease of Doing Business: Predictable scrap supply for the auto and steel industries.

Conclusion

India’s ELV challenge sits at the intersection of urbanisation, climate action, industrial policy, and governance reform. While the regulatory architecture is largely in place, success hinges on bridging the price gap between informal and formal scrapping, expanding last-mile infrastructure, and simplifying digital de-registration.

A well-functioning circular ELV ecosystem can transform a looming waste crisis into a resource opportunity, aligning India’s rapid motorisation with its commitments to sustainability, air quality, and circular economy principles.

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