India’s 3% ELV figure should be a wake-up call for the formal recycling sector

India’s formal ELV system is capturing less than 3% of estimated end-of-life vehicles, exposing a major gap between policy ambition and market reality. For authorised recyclers, the figure highlights the need for stronger incentives, accessible infrastructure, traceable EPR systems and practical routes to bring informal volumes into compliant channels.

Aerial view of end-of-life vehicles at a recycling yard, illustrating India’s formal ELV capture challenge. — Image credit: Envato Elements

India’s vehicle recycling ambitions are clear. The country wants a structured, environmentally sound and economically viable system for dealing with end-of-life vehicles. It has a vehicle scrappage policy, Registered Vehicle Scrapping Facilities, Automated Testing Stations, digital platforms and now an emerging Extended Producer Responsibility framework.

Yet the latest figures suggest that the formal system is still capturing only a fraction of the vehicles it was designed to handle.

According to a report citing a NITI Aayog presentation, just 350,000 of India’s estimated 12 million end-of-life vehicles were scrapped through authorised channels between August 2022 and July 2025. That equates to less than 3%.

For a country of India’s automotive scale, this is not a marginal implementation issue. It is a structural challenge for the entire ELV value chain.

NITI Aayog’s broader report, Enhancing the Circular Economy of End-of-Life Vehicles in India, underscores the scale of the opportunity. India’s ELV stock is expected to rise from around 23 million vehicles in 2025 to nearly 50 million by 2030. That growth represents a major environmental concern, particularly where older, higher-emitting vehicles remain in circulation or are dismantled outside regulated systems. But it also represents a significant resource opportunity for steel, aluminium, copper, plastics, reusable parts and future battery-related materials.

The problem is that policy intent and market behaviour are not yet aligned.

India’s formal recycling infrastructure remains limited. NITI Aayog points to gaps in both Automated Testing Stations and Registered Vehicle Scrapping Facilities, with facilities unevenly distributed across the country. For vehicle owners, access matters. If the authorised route is distant, slow or poorly understood, the informal route becomes the easier option.

Price is another decisive factor. Informal dismantlers can often offer more for vehicles because they operate with lower compliance costs, limited environmental safeguards and fewer tax or documentation obligations. For the owner of an old car or commercial vehicle, the choice may be simple: accept the higher immediate payment from an informal buyer or navigate a formal system that may be better for the environment but less financially attractive.

That is the central challenge. A circular economy cannot be built on regulation alone. It has to work commercially for the recycler, the vehicle owner, the OEM and the downstream material market.

For authorised recyclers, the low formal capture rate is both a concern and an opportunity. It suggests that significant ELV volumes remain outside the regulated network. But it also highlights the need for stronger incentives, simpler processes and better public awareness if those vehicles are to move into compliant treatment channels.

The introduction of Extended Producer Responsibility for end-of-life vehicles could be a significant turning point. If OEMs are required to demonstrate recovery and recycling of materials from old vehicles, demand for verified, traceable recycling should increase. This could improve the business case for formal RVSFs and encourage investment in better dismantling, depollution, parts recovery and material separation.

However, EPR will only succeed if the supporting infrastructure is credible. Certificates must reflect real recycling activity. Digital systems must connect vehicle deregistration, scrappage certificates and material recovery. Informal operators will also need a pathway into the formal economy. India risks creating two parallel systems: one compliant but under-supplied, and one informal but dominant.

For the global auto recycling sector, India’s experience is instructive. Many emerging markets face the same issue: large ELV volumes, valuable material streams, ambitious circular economy policy, but a deeply embedded informal dismantling economy. The lesson is that formalisation must be practical, profitable and accessible.

India does not lack vehicles to recycle. It does not lack policy direction. What it needs now is execution at scale.

Less than 3% formal scrappage is a stark figure. But it should not be read only as a failure. It is also a measure of how much of the market is still to be captured. For authorised recyclers, OEMs, policymakers and technology providers, India may become one of the most important test cases for building a modern ELV ecosystem in a fast-growing automotive market.

The question is whether the formal sector can move quickly enough to make itself the natural destination for India’s end-of-life vehicles.