A ₹9,585 Crore Truck Scheme Just Met a 70% Scrap Shortfall. Recyclers Are in the Middle. · Recykal Times
Choose your reading language
We'll remember it for every article.
Read this article in:
Editor’s PickIndustry Trends·High urgency
A ₹9,585 Crore Truck Scheme Just Met a 70% Scrap Shortfall. Recyclers Are in the Middle.
This week, Eicher-maker VECV signed a deal to route old trucks into registered scrapping centres. Behind it are a government scheme to replace more than 2 lakh old trucks and buses, and an auto industry that missed its legal scrapping target by 70%. For the first time, subsidy money and compliance demand are pointing at the same scrapyard gate.
Recykal Times Desk·23 Sept 2026·12 min read·11 sources
Share
Editorial image for “A ₹9,585 Crore Truck Scheme Just Met a 70% Scrap Shortfall. Recyclers Are in the Middle.”, illustrating ferrous.
On 21 September, VE Commercial Vehicles, the maker of Eicher trucks and buses, signed an initial pact with Rosmerta Auto Recycling to help its customers across NCR retire old vehicles through registered scrapping facilities. Rosmerta will handle documentation, digital Certificates of Deposit, depollution and dismantling.
On paper, it's a routine corporate tie-up. In context, it's the clearest sign yet that three pressures are converging on India's vehicle recycling industry:
A subsidy pipeline. PARIVARTAN, approved by the Union Cabinet on 3 June 2026 with a ₹9,585 crore outlay, pays owners of about 2 lakh old trucks and buses in Delhi-NCR to replace them, but only if the old vehicle is scrapped at a registered facility.
A compliance hole. Under India's end-of-life vehicle (ELV) rules, automakers needed 7.62 lakh vehicles scrapped at registered centres in FY26. Only 2.42 lakh arrived, a shortfall of about 70%.
A supply threat. On 18 September, the European Commission published a draft regulation under which India could lose access to EU metal scrap from May 2027.
States are moving too. On 14 September, Assam brought vehicle scrapping facilities under its eligible industrial framework.
Put together, these add up to one conclusion: a legally scrapped vehicle is becoming one of the most valuable inputs in India's auto and metals economy, and the recycling industry controls the supply.
The numbers at a glance
PARIVARTAN outlay
₹9,585 crore (₹5,041 crore central support)
Vehicles targeted by PARIVARTAN
about 2.07 lakh (1.91 lakh trucks, 16,329 buses), Delhi-NCR, within a year
FY26 ELV scrapping requirement
7.62 lakh vehicles
Actually scrapped at RVSFs in FY26
2.42 lakh (about 70% short)
SIAM's estimate of the one-time accounting hit
about ₹25,000 crore (gross)
Vehicles scrapped at RVSFs to date
over 4.3 lakh
RVSF utilisation
below 20% (NITI Aayog)
Target path
8% now, 13% from FY31, 18% from FY36
Why automakers suddenly need scrapped vehicles
The Environment Protection (End-of-Life Vehicles) Rules, 2025 came into force on 1 April 2025. They make every manufacturer responsible for the vehicles it sold years ago. Each year, steel equal to 8% of the steel in those old vehicles has to be recovered through a Registered Vehicle Scrapping Facility (RVSF). The reference is FY2005-06 sales for private vehicles and FY2010-11 for commercial vehicles.
The system runs on certificates. When an RVSF scraps a vehicle and logs the recovered steel on the Central Pollution Control Board (CPCB) portal, it earns an EPR certificate: 1 kg of certificate for every 1 kg of steel. Automakers buy these certificates to meet their targets.
Three details matter commercially:
Only registered facilities can issue certificates. A vehicle broken up informally earns nothing on the portal, however well it is recycled.
Certificates are valid for five years, so automakers can buy ahead against larger future targets.
Prices are negotiated between the automaker and the RVSF, not fixed by CPCB.
Missing the target isn't cheap either. Producers who fall short pay Environmental Compensation on each unit of unmet obligation, a charge intended to cost more than compliance. Part of it is refundable if the shortfall is made up within three years.
In FY26, the industry fell 70% short. One industry analysis summed it up: "The gap is a supply gap, not a paperwork one."
The door that closed on 27 March
In the first year, "other steel scrap materials" could count towards certificates. An amendment dated 27 March 2026, which some reports describe as still in draft, removes that option. Only steel from actually scrapped vehicles now qualifies.
The Society of Indian Automobile Manufacturers (SIAM) has asked for a phased transition rather than an exemption. It argues that Automated Testing Stations, the fitness-testing centres meant to push old vehicles towards scrapping, are producing negligible volumes so far.
The stakes show up on balance sheets. Rule 4(6) says a producer's obligation for vehicles already on the road survives even if it stops operating. That turns past sales into a liability, which triggers provisioning under the Ind AS 37 accounting standard. SIAM's preliminary estimate puts the one-time gross impact for FY2025-26 at about ₹25,000 crore, or about ₹9,000 crore on a discounted basis. Carmakers carry an estimated ₹14,623 crore and two- and three-wheeler makers about ₹9,650 crore. The March amendment left Rule 4(6) unchanged.
When an industry faces a liability of that size, the people who can reduce it gain bargaining power.
Capacity isn't the problem. Supply is.
The first instinct is to blame too few scrapping centres. The numbers don't support that.
NITI Aayog counted 117 operational RVSFs across 21 states and union territories, with 178 approved and 227 needed by 2027. A standard facility is designed for about 20,000 vehicles a year, so the operational network alone could handle roughly 23 lakh vehicles a year. FY26 volume was about a tenth of that, which matches NITI's finding that utilisation is below 20%.
Formal volumes are growing fast. NITI puts RVSF throughput at about 72,000 vehicles in FY2024-25. On these figures, volume more than tripled in a year and still fell 70% short.
The vehicles exist, but many go elsewhere. NITI's May 2025 survey of more than 200 informal scrapping units across 17 states and union territories estimated their capacity at 2 to 3 lakh end-of-life vehicles a year, about four times what RVSFs handled in FY2024-25.
The ₹15,000 problem
NITI Aayog's worked example uses a Swift Dzire-equivalent car worth about ₹7 lakh. An informal operator can offer about ₹38,000 for it, while an RVSF can offer about ₹23,000. NITI traces the informal advantage to low investment and operating costs, GST evasion, non-compliance with environmental standards and resale of spare parts. Formal facilities pay GST at 5% or 18% through the chain, while informal operators, in NITI's words, "face no comparable GST obligations."
There's a partial offset. NITI calculates that an owner who buys a new vehicle can get about ₹22,500 more through the Certificate of Deposit and OEM discounts. That only helps owners who are replacing their vehicle. For everyone else, the informal yard pays more, in cash, on the day.
What would certificates need to be worth to close the gap on their own?
NITI's model assumes an average vehicle of 1,500 kg with 60% steel, or about 900 kg. At that size, closing ₹15,000 takes about ₹17 per kg of certificate.
A Dzire-sized car is lighter, roughly a tonne, with about 600 kg of steel. That takes about ₹25 per kg.
NITI values scrap steel at ₹35 per kg.
(This is our own estimate from NITI's published figures.)
So a certificate alone would have to be worth roughly half to 70% of the value of the steel itself. That's a big ask for a market that's only a year old.
PARIVARTAN: the first time the maths favours the formal route
This is where this summer's policy changes things.
PARIVARTAN doesn't wait for certificate prices to rise. It pays the vehicle owner directly, on one condition: the old vehicle has to be scrapped at a Registered Vehicle Scrapping Facility. Approved by the Union Cabinet on 3 June 2026, it covers about 2.07 lakh vehicle owners, roughly 1.91 lakh trucks and 16,329 buses, in Delhi and the NCR districts of Haryana, Rajasthan and Uttar Pradesh. The target is to replace them within a year. For owners of BS-IV and older vehicles who buy a new, cleaner one, the package includes:
a 100% motor vehicle tax waiver for 10 years
a full registration fee waiver
a 5 percentage-point interest subsidy on the vehicle loan for five years
an OEM discount of at least 8% on the ex-showroom price
a waiver of pending liabilities older than one year on the scrapped vehicle
Owners who replace with a used vehicle get a 50% tax concession, the interest subsidy, and fuel vouchers of ₹1,200 to ₹4,800 a month for five years, or an equivalent benefit for electric vehicles. Participating states are contributing an estimated ₹1,601 crore in tax concessions.
A ₹15,000 cash premium at an informal yard can't compete with a subsidised loan, a discount of 8% or more on a new truck and written-off dues. For the first time, an owner's own maths favours the formal route, at least for heavy vehicles in NCR.
Heavy vehicles also carry far more steel than cars. By industry estimates, a mid-size goods vehicle yields 1.2 to 1.8 tonnes of ferrous scrap and 40 to 80 kg of aluminium, copper and brass. If PARIVARTAN's roughly 2 lakh target vehicles are scrapped through RVSFs, they could generate an estimated 2.4 to 3.6 lakh tonnes of ferrous scrap, all certificate-eligible, within about a year. (This is our own estimate based on per-vehicle yields for mid-size goods vehicles. Heavier trucks yield more.) Counted by weight rather than number of vehicles, the scheme matters far more to the certificate market than its vehicle count suggests.
That explains why an OEM like VECV is tying up with a scrapping operator now. Whoever sets up the route from an old truck to a registered facility captures both the subsidised replacement sale and the certificates.
The curve gets steeper
The FY26 target was the easiest one in the rules: 8% until FY30, 13% from FY31 and 18% from FY36. The FY36 target is 2.25 times today's.
There are plenty of vehicles. NITI estimates India's cumulative stock of end-of-life vehicles at nearly 2.3 crore in 2025, rising to close to 5 crore by 2030. The routes into the formal system are what's missing. India had 156 operational Automated Testing Stations across 16 states and union territories as of September 2025, each able to test about 30,000 vehicles a year. Delhi has one, against an estimated need of 15. Maharashtra, which NITI estimates needs 54, had none.
PARIVARTAN covers one region and one vehicle class. The rest of the country still depends on fitness testing, state incentives such as Assam's, and certificate prices.
The aluminium angle nobody is pricing in
Most of the discussion is about steel, because that's what the certificates count. The bigger strategic value may be in non-ferrous metal.
The European Commission's draft regulation of 18 September could exclude India from EU metal scrap from 21 May 2027. The Commission found India has not shown the material would be managed in an environmentally sound way. India imported about 3.66 lakh tonnes of aluminium scrap from the EU in 2025, and by industry estimates automakers use roughly 60% of India's domestically produced secondary aluminium. Recykal Times covered the EU threat earlier.
Every heavy vehicle scrapped under PARIVARTAN releases tens of kilograms of non-ferrous metal into the domestic supply. As imported scrap gets harder to secure, ELV aluminium becomes a supply-security asset, not just a compliance tool.
What this means for you
Automotive CXOs: VECV's move is the template. Pair a subsidised replacement sale with a scrapping partner and you capture the new-vehicle sale, customer loyalty and the certificates in one transaction. Certificates last five years, so banking them early while the market is young is a cheaper hedge than paying Environmental Compensation later.
RVSF operators: You sell two products, steel and certificates, so price them separately. PARIVARTAN hands NCR facilities a subsidised inflow of heavy, steel-rich vehicles. The operators who sign OEM and dealer partnerships first will fill capacity first. At below 20% utilisation and about ₹14 crore of capital per facility, NITI estimates break-even in the tenth year of operation, and utilisation is the lever that shortens it.
Aggregators and collection networks: The scarce asset is an old vehicle with clean papers that can be deregistered. Fleet operators in NCR now have a strong incentive to retire BS-IV trucks and buses. Networks that can reach them, handle the paperwork and deliver vehicles to registered facilities become the preferred suppliers to RVSFs and, indirectly, to automakers.
Informal dismantlers: PARIVARTAN tilts NCR's heavy-vehicle flow towards the formal system. Some established dismantlers in clusters such as Delhi's Mayapuri are reported to already hold licences to issue Certificates of Destruction. Registration and formalisation are how existing supply relationships keep their value as the subsidy shifts owners' behaviour.
Steel and non-ferrous buyers: Heavy-vehicle scrapping in NCR will produce a steady stream of traceable, graded ferrous and non-ferrous scrap over the scheme's life. Secure offtake relationships with NCR's RVSFs before that volume is spoken for, especially for aluminium ahead of the EU's May 2027 date.
What to watch in the next six months
PARIVARTAN's first scrapping numbers. How many NCR trucks and buses actually reach RVSFs will show whether subsidies can do what certificates haven't.
More OEM and RVSF tie-ups. VECV and Rosmerta are unlikely to be the last. Watch other truck and bus makers.
The final version of the 27 March amendment, and whether SIAM gets a phased transition.
The first real certificate prices and Environmental Compensation rates, which set how much a certificate can be worth.
The EU's list of authorised countries, due by 21 November 2026.
Assam's incentive details for scrapping facilities, and whether other states follow.
The bottom line
India wrote the ELV rules as an environmental obligation and PARIVARTAN as a clean-air scheme. Together they've done something neither was designed to do alone: made the legally scrapped vehicle scarce, subsidised and in demand at the same time. Automakers own the liability, the government is paying for the route, and recyclers, aggregators and scrapping facilities own the supply.
The VECV and Rosmerta deal is the first of many. Players who secure their vehicle supply in the next six months will set the terms for everyone who comes after.
Discussion
Be the first to comment.