Vehicle scrappage policy: Circular economy faces recycling scale hurdle

Targeted to promote a circular economy, India’s vehicle scrapping policy has sought to incentivise owners to dispose of their 25-year-old commercial and 20-year-old private vehicles. But beyond that, handling the scale of vehicles that have already been scrapped because of new emission norms or will be rendered unfit in a test, will still be a challenge since organised scrapping facilities are limited, putting a question mark on environmentally safe disposal of vehicle’s metal and even battery scrap.

While launching the policy on Friday, which also found mention in his 75th Independence Day speech, Prime Minister Narendra Modi said the country will be moving towards a circular economy. The vehicle scrapping policy is an important starting point in this since it works on the concept of reduce, reuse and recycle, he said. 

Tata Motors, Mahindra and Mahindra (M&M) and Maruti Suzuki have partnerships for scrapping vehicles. Last week, Tata Motors — India’s largest commercial vehicle manufacturer — said it had entered into an agreement with the Government of Gujarat, through the ports and transport department, to support setting up a registered vehicle scrapping facility in Ahmedabad, for end-of-life passenger and commercial vehicles.

Apart from M&M, which has a joint venture with MSTC, major automobile players are yet to get their plans off the ground on what happens to used cars. But the number scrapping yards in the country to take in the potential number of vehicles that could be scrapped are not enough, so the government is encouraging companies to set up such facilities under the policy that will come into force through the Motor Vehicles (Registration and Functions of Vehicle Scrapping Facility) Rules, 2021.

Typically, the process of scrapping cars involves stripping them and shredding and melting the leftovers — mostly steel and aluminum, to make recycled steel. Reusing steel can lower carmakers’ costs by 20-40 per cent.

When extrapolated vehicle manufacturers that have largescale operations and churn out more than 100,000 vehicles a month, the savings in cost are huge, an executive at a carmaker had told Business Standard earlier. The companies setting up scrapping units will have to import equipment from the US and Europe for such plants.

Anumita Roychowdhury, executive director at Center of Science and Environment, said, “If dismantled properly, the scrap can recover material for automotive, steel, and electronics industry among others.”

This could be better quality because they are already processed but of lower price. An estimated 8.7 million vehicles by 2015 and nearly 22 million by 2025 would reach end-of-life (ELV) status and could be available for scrapping. To begin with, this level of scrapping demands a good network of vehicle fitness centres that will decide which vehicles are fit or will go for scrapping.

Tata Motors’ scrappage centre will have the capacity of recycling up to 36,000 vehicles a year. The MoU was signed at the Investor Summit in Gandhinagar, Gujarat. Tata Motors will set up the scrapping centre in association with a partner, it said in the statement.

For setting up the RVSF, multiple levels of approval will be required primarily from state- and city-level organisations. These approvals will include environment, water and land use approvals apart from registration of such centres.  

In April this year, the Mahindra Group said it had signed an agreement with Mahindra MSTC Recycling Private Limited (MMRPL) to offer its customers an end-to-end solution for scrapping vehicles. MMRPL is engaged in the business of acquiring used/end of life vehicles to dismantle and scrap it under the brand name of CERO, the company said in a statement. The agreement with MMRPL will enable customers to get a hassle-free and transparent deal under one roof, it added.

It is India’s first authorized recycler for motor vehicles built on PPP model with dismantling centres at Greater Noida, Pune and Chennai. It also has collection centres in major cities such as Mumbai, Bengaluru, Hyderabad, Ahmedabad, Jaipur and Chandigarh. CERO has plans to expand to 25 cities in 8-10 months.

Company’s dealerships, along with CERO will offer vehicle evaluation, arrange quotes for exchange/scrappage value of the vehicle, provide end-to-end services, including vehicle pickup, transportation and environment-friendly dismantling at CERO Scrap yards. CERO will issue the Certificate of Deposit/Destruction (COD), which will enable customers to claim eligible benefits under the policy.

Tata Motors, too, is reported to be collaborating with its dealers to build vehicle scrap yards in Howrah (West Bengal), Karnal (Haryana), Hyderabad (Telangana) and Greater Mumbai (Maharashtra), though it is not clear if it will make the investment itself. Its sister concern, Tata Steel, had in August 2020 announced that it would be setting up a scrap processing plant of 0.5 million tonne capacity in Rohtak, Haryana.

The registered vehicle scrapping facility is required to be equipped with a depollution system, preferably with zero discharge, and dismantling is to be done by making use of best available technology for processing the ELVs, goods and other scrap. For this, the collection centres would need to comply with health and safety legislation/regulation and environmental norms.