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NITI Aayog | Ministry of Road Transport and Highways (MoRTH) | Ministry of Steel
NITI Aayog report titled Enhancing Circular Economy of End-of-Life Vehicles (ELVs) in India discusses strategies for enhancing the circular economy of end-of-life vehicles (ELVs) in India, focusing on sustainable management and recycling practices.
India is transitioning toward a regulated vehicle scrapping ecosystem to address the environmental and safety risks posed by End-of-Life Vehicles (ELVs). The Voluntary Vehicle-Fleet Modernization Program (VVMP), or the National Vehicle Scrappage Policy, aims to phase out unfit and polluting vehicles through mandatory automated fitness testing. As of 2026, the policy emphasizes a shift from a “waste-disposal” mindset to a “material-recovery” framework, targeting the systematic retrieval of high-value commodities like steel, aluminum, copper, and plastics to reduce industrial reliance on virgin ores.
Infrastructure and Formalization of the Scrapping Ecosystem The policy framework focuses on building a robust network of Registered Vehicle Scrapping Facilities (RVSFs) and Automated Testing Stations (ATS).
Material Recovery Potential: A single 4-wheeler ELV can yield approximately 65-70% steel and iron, which can be recycled into high-grade automotive steel, potentially reducing manufacturing costs by 30-40%.
Formalizing the Informal Sector: Currently, a predominant share of ELVs is handled by unorganized “scrapping clusters” (e.g., Mayapuri), which lack environmental safeguards. New directives aim to integrate these workers through Recognition of Prior Learning (RPL) and technical training to maintain livelihoods while improving recovery efficiency.
Digital Traceability: The implementation of the Certificate of Deposit (CoD) system provides a digital trail, allowing owners to avail of tax concessions and scrap value while ensuring the vehicle is permanently removed from the national registry.
What is a “Certificate of Deposit” (CoD) in the context of the Scrappage Policy? A Certificate of Deposit is a digital document issued by a Registered Vehicle Scrapping Facility (RVSF) to a vehicle owner upon surrendering their ELV for scrapping. It serves as legal proof of destruction and is the primary instrument for claiming policy incentives, including registration fee waivers, road tax concessions (up to 25%), and discounts on the purchase of a new vehicle from participating OEMs.
Policy Relevance
The formalization of the ELV sector is a strategic pillar for India’s Net Zero 2070 commitment and industrial self-reliance.
Strategic Resource Security: Maximizing domestic scrap recovery reduces India’s dependency on imported melting scrap, which currently costs the economy billions in foreign exchange.
Decarbonizing the Steel Sector: Utilizing recycled steel in electric arc furnaces consumes 70-75% less energy and generates significantly lower CO2 emissions compared to primary steel production from iron ore.
Competitive Federalism: Various states (e.g., Bihar, Odisha, and Maharashtra) are offering tiered road tax concessions of 10-25% to incentivize early adoption and stimulate local automotive demand.
Follow the full report here: Enhancing Circular Economy of End-of-Life Vehicles (ELVs) in India