The road ahead: Steel recycle mandate for automakers on the anvil

Starting FY26, at least 8% steel used in vehicles sold 20 yrs ago may have to be reprocessed

The environment ministry is likely to soon issue regulations that will mandate automakers to recycle a specified percentage of steel from old vehicles, starting from the next financial year, according to people familiar with the matter.

“We recently held a meeting with members of the Society of Indian Automobile Manufacturers (Siam). The final regulations are likely to be issued in the next 10 days,” a government source informed.

The move, according to government officials, is a step toward “formalising” vehicle scrapping in the country and make automakers “active stakeholders” in the broader policy against air pollution.

India currently has just 70 registered vehicle scrapping facilities (RVSFs), as listed on Siam’s website. With the impending regulations set to take effect in less than seven months, automakers will be pushed to make substantial investments, either by establishing their own RVSFs or partnering with third-party operators, the sources indicated.

The Ministry of Environment, Forest and Climate Change (MoEFCC) had earlier issued a draft notification on January 30 under the Environment (Protection) Rules, 1986, outlining “extended producer responsibility (EPR) for end-of-life vehicles”.

Sources revealed that a Siam delegation, including representatives from Hero MotoCorp, Mahindra & Mahindra, Maruti Suzuki India, Ashok Leyland, JSW MG Motor, and TVS Motor, recently met with the environment ministry officials. Following discussions, the ministry agreed to provide some flexibility regarding the steel recycling mandate in the draft notification.

The draft notification stated that in 2025-26, automakers must recycle or recover at least 10 per cent of the steel used in vehicles placed on the market in 2005-06. Similarly, in FY27, the 10 per cent mandate will be for vehicles sold in FY07.

This model shall apply to each financial year until FY30.

Recycling must be done through automakers’ own or third-party RVSFs.

In 2030-31, the requirement shall increase to 20 per cent of vehicles placed on the market in 2010-11 -- a model that shall apply for each finacial year until FY35 for vehicles sold 20 years ago. From 2035-36, the mandate shall rise to 30 per cent of automobiles completing 20 years on road.

These targets may be revised, with the first category potentially reduced from 10 per cent to 8 per cent, the second from 20 per cent to 13 per cent, and the third from 30 per cent to 18 per cent, the sources said.

The environment ministry, Siam, and the above-mentioned automobile companies did not immediately respond to queries from Business Standard in this connection.

If companies fail to meet the EPR targets, provide false information, or do not recover steel as required, the Central Pollution Control Board (CPCB) will be empowered to impose an “environmental compensation (penalty)” on them.

The final regulations may also allow automakers to implement buyback schemes, deposit refund schemes, or similar initiatives to encourage customers to sell or submit old vehicles to RVSFs, enabling companies to meet their EPR obligations, the sources said.

The regulations will require RVSFs to generate an EPR certificate for automakers based on the amount of steel extracted from processing end-of-life vehicles. This data must be uploaded to an online portal and verified by the CPCB or another authorised agency.

These upcoming regulations specifically address steel recycling and do not cover other vehicle components like batteries, tyres, and used oil, which have separate disposal and recovery regulations.

The EPR regulations for automakers are similar to those issued last month, mandating that all new products made from non-ferrous metals – such as aluminium, copper and zinc -- must contain at least 5 per cent recycled content starting in the financial year 2027-28. This mandate will gradually increase, reaching 10 per cent in FY29. By FY31, products made of aluminium must contain 10 per cent recycled content, copper 20 per cent, and zinc 25 per cent.