Auto OEMs miss FY26 scrap target by 70%, blame it on unrealistic ELV rule

Auto manufacturers in India have fallen short by 70% in meeting the steel equivalent vehicle scrapping commitments in FY26. The target was set under the end-of-life vehicle rules, notified by the Ministry of Environment, Forest and Climate Change in January last year, as the Environment Protection (End-of-Life Vehicles) Rules 2025. It came into effect on April 1 last year. PTI has reported that industry executives have blamed the rule as an unrealistic policy for making the entire auto sector non-compliant.

ELV rule: Impacts auto companies' scrappage commitments

The End-of-Life Vehicle (ELV) rule required the automakers in India to meet extended producer responsibility (EPR) obligations based on the weight of steel recovered from the scrappage of end-of-life vehicles or other steel scrap materials processed at registered scrapping facilities. The Ministry of Environment issued a draft amendment to the notification on March 27, 2026, removing the provision of other steel scrap materials for the issuance of the EPR certificate, mandating only steel generated from scrapped vehicles to be counted for the certification.

This rule requires auto manufacturers in the country to scrap ELVs sold in the domestic market 20 and 15 years back for private and commercial vehicles, respectively, in order to get the EPR certificate. According to the rule, in FY26, manufacturers had to scrap a minimum of 8% of the steel equivalent of vehicles sold in FY2005-06 and FY2010-11, for the private and commercial segments, respectively. This translates to a total of 95.2 lakh vehicles eligible for fitness test in 2025-26, and out of which 7.62 lakh were required to be scrapped in order to meet the 8% target.

What industry executives say?

Citing the official data, an industry executive reportedly said that the actual old vehicles received for scrapping at the scrappage centres were just 2.42 lakh in FY26, and there was a shortfall of 5.2 lakh vehicles, which means for the entire auto industry, there was a shortfall of 70%.

What has made the condition worse for the auto industry in meeting the EPR obligation is the prohibition of counting other steel scrap materials in the March 2026 amendment to the rule, another industry official reportedly said. "Most OEMs had planned to meet targets with both vehicle scrapping and steel scrap from other sources. However, after the removal of that clause, meeting these targets has become nearly impossible," PTI has quoted the executive saying.

Stating that the policy is unrealistic, another industry executive said that this has resulted in the auto industry falling way short of the target set for scrappage. “As such, there were not many ELVs coming to scrapping centres," he added.

Another industry executive reportedly said the shortfall in EPR targets can only be achieved after using other steel scrap materials besides old vehicles, as after every 5-year cycle, the shortfall will increase. The 8% target continues for 5 years till 2029-30, and then it increases to 13% for the period 2030-31 to 2034-35 and 18% for 2035-36 onwards, the executive said, while advocating for a relook at the policy.

Auto industry body Society of Indian Automobile Manufacturers (SIAM) had already written to the ministry, raising concerns over the limited availability of end-of-life vehicles for meeting the EPR targets. Besides, SIAM had also highlighted to the ministry that automated testing stations were generating negligible ELV volumes, while urging it to allow the usage of other automotive steel scrap for EPR compliance in the initial years with a phased transition framework until the ELV ecosystem matures.

Get insights into Upcoming Cars In India, Electric Vehicles, Upcoming Bikes in India and cutting-edge technology transforming the automotive landscape.