ELV Rules Make Auto Sector Non-Compliant; FY26 Scrap Target Missed by 70%

Auto companies in India fell short by 70 per cent in meeting the steel equivalent vehicle scrapping commitments in FY26 set under the environment ministry's end-of-life vehicle rules, even as industry executives blamed 'unrealistic policy' for making the entire sector non-compliant.

The Ministry of Environment, Forest and Climate Change, notified the Environment Protection (End-of-Life Vehicle) Rules, 2025, in January last year, and it came into effect on April 1, 2025.

It required automakers to meet extended producer responsibility (EPR) obligations on the basis of the weight of steel recovered from the scrappage of end-of-life vehicles (ELVs) or other steel scrap materials processed at registered scrapping facilities.

However, a draft amendment to the notification on March 27, 2026, issued by the ministry removed 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.

The rule requires manufacturers to scrap ELVs sold in the domestic market 20 and 15 years back for private and commercial vehicles, respectively to get the EPR certificate.

According to the rule, in FY26, manufacturers had to scrap a minimum of 8 per cent of the steel equivalent of vehicles sold in FY2005-06 (for private) and FY2010-11 (for commercial). It 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 per cent target.

"The actual old vehicles received for scrapping at scrappage centres were just 2.42 lakh in FY26, and there was a shortfall of 5.2 lakh vehicles," an industry executive said on the condition of anonymity, citing official data.

"So, for the entire auto industry, there was a shortfall of 70 per cent," the executive said.

What has made the condition worse for the auto industry in meeting the EPR obligation was the prohibition of counting 'other steel scrap materials' in the March 2026 amendment to the rule, said another industry official.

"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," lamented the executive.

Stating that the "policy is unrealistic", another industry executive said, "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".

Auto industry body Society of Indian Automobile Manufacturers (SIAM) had also written to the ministry, raising concerns over the limited availability of ELVs for meeting 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.

Another industry executive said the shortfall in EPR targets can only be achieved after using "other steel scrap materials" besides old vehicles, as after every five-year cycle, the shortfall will increase.

The 8 per cent target continues for five years till 2029-30, and then it increases to 13 per cent for the period 2030-31 to 2034-35 and 18 per cent for 2035-36 onwards, the executive said, while advocating for a relook at the policy.