Enhancing Circular Economy of ELVs in India Report
Kartavya Desk Staff
Source: TP
Subject: Economy
Context: A NITI Aayog report “Enhancing Circular Economy of ELVs in India” has warned that end-of-life vehicles (ELVs) in India could double to nearly 50 million by 2030, posing serious safety, pollution and waste-management risks.
About Enhancing Circular Economy of ELVs in India Report:
What is ELVs?
• End-of-Life Vehicles (ELVs) as those no longer roadworthy, invalidly registered, or voluntarily declared as waste by owners. The study emphasizes the scientific management of ELVs to recover valuable resources like steel while mitigating the hazards of unscientific dismantling.
Key Trends and Data:
• Surging ELV Stock: The number of ELVs is expected to nearly double from 23 million in 2025 to 50 million by 2030.
• Pollution Load: Older BS-I vehicles emit up to eight times more pollutants than modern BS-VI standard vehicles.
• Resource Potential: Approximately 98 million tonnes of steel can be recovered from vehicles manufactured between 2005 and 2023.
• Infrastructure Gap: India requires 500 Automated Testing Stations (ATS) by 2027, but as of September 2025, only 156 are operational.
• Informal Dominance: The informal sector handles roughly 2-3 lakh ELVs annually, while formal facilities (RVSFs) only managed 72,000 in FY 2024-25.
Regulatory Landscape for ELVs:
• Voluntary Vehicle-Fleet Modernisation Program (2021): Introduced mandatory fitness testing for private vehicles (>20 years) and commercial vehicles (>15 years).
• Motor Vehicles (RVSF) Rules, 2021: Established the framework for Registered Vehicle Scrapping Facilities and the issuance of Certificates of Deposit (CoD).
• EPR Rules, 2025: Mandates Extended Producer Responsibility for OEMs, requiring them to meet steel recovery targets (e.g., 8% for 2025-2030).
• Mandatory ATS Testing: As of October 2024, fitness testing for heavy, medium, and light transport vehicles must be conducted exclusively through ATS.
• Incentive Schemes (SASCI): The Ministry of Finance provided over INR 2,000 crore to states to support vehicle scrapping and ATS setup.
Key Challenges:
• Significant price differential: Informal scrappers outbid formal players by evading GST, environmental norms, and compliance costs, making them more attractive to owners seeking quick cash.
E.g. An informal buyer offers ~₹38,000 for a Dzire-class car, while an RVSF can pay only ~₹23,000, creating a ₹15,000 incentive to choose the informal route.
• Regional infrastructure imbalance: ATS and RVSFs are clustered in a few states, forcing owners elsewhere to rely on informal scrapping due to distance, cost, and access barriers.
E.g. Gujarat operates ~56 ATS units, whereas states like Sikkim or Arunachal Pradesh have negligible or no functional facilities.
• Procedural bottlenecks in de-registration: Paper-heavy, physical verification requirements deter owners from formal closure, keeping ghost vehicles on official records.
E.g. Many vehicles remain active on the VAHAN database despite being scrapped, as there’s no penalty for failing to de-register.
• Weak financial viability of formal facilities: High capex and low inflow—diverted to informal yards—leave RVSFs underutilized and financially stressed.
E.g. With <20% capacity utilization, a typical RVSF may take nearly a decade to reach break-even.
• Improper issuance of fitness certificates: Shortcuts and intermediaries undermine testing integrity, eroding safety and environmental objectives.
E.g. Some ATS units issue fitness certificates without vehicle presence, charging unofficial premiums above notified fees.
NITI Aayog Recommendations:
• Infrastructure Expansion: Adopt a one ATS per district goal and explore PSU-led models for RVSFs in commercially unviable regions.
• Sector Formalization: Integrate informal clusters through the Udyam Assist Platform and provide one-time waivers for legacy environmental liabilities.
• EPR Strengthening: Raise steel recovery targets (up to 35% by 2035) and refine rules to exclude production scrap from meeting ELV targets.
• Digital Reforms: Mandate Aadhaar-based ownership transfer and allow de-registration only upon submission of a valid CoD.
• Financial Innovation: Ratify a methodology for Carbon Credits from formal scrapping, potentially adding INR 2,000 per vehicle in revenue.
Conclusion:
Developing a formal ELV ecosystem is critical for India to balance rapid motorization with its climate goals and resource security. By bridging the price gap between formal and informal sectors and simplifying digital de-registration, India can unlock significant economic value. Success depends on a coordinated rollout of infrastructure and strict regulatory enforcement across all states.
Q. The widespread adoption of electric vehicles (EVs) in India faces several key challenges. Addressing these challenges is essential to overcome the barriers to EV adoption and pave the way for a cleaner and more sustainable transportation future in India. Evaluate. (250 words)