https://aws.steelmint.com/indias-elv-recycling-facilities-to-open-up-new-scrap-supply-horizon-425259
India: Number of registered vehicle scrapping facilities rise over 50% in last 6-7 months
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- Applications for new units increase rapidly
- 43 facilities currently operational
- Scrap generation from ELVs to reach over 5 mnt by FY’24-25
Morning Brief: The government launched the National Vehicle Scrappage Policy in August 2021, and it officially came into effect in August 2022. The policy is aimed at phasing out unfit, polluting vehicles, and promote a circular economy. It also aims at boosting vehicle sales: vehicles older than 20 years (passenger) or 15 years (commercial) must pass fitness and emissions tests, or else they will lose registration and will be recommended for scrapping.
With the government starting to accept applications from entities interested in establishing scrap recycling facilities, the scrappage policy is taking a definite shape, as it allows interested parties to actively participate in the development and operation of recycling facilities dedicated to end-of-life vehicles (ELVs).
Policy incentives/overview
- Scrap value for the old vehicle given by the scrapping centre to be 4-6% of the ex-showroom price of a new vehicle.
- Concession on motor vehicle tax of up to 25% for non-transport vehicles and up to 15% for transport vehicles.
- Registration fees to be waived for purchase of new vehicle against the certificate of deposit (CD).
- Auto OEMs have been advised to provide 5% discount on the purchase of a new vehicle against the certificate of deposit.
Operational recycling facilities
As per data available with SteelMint, a total of 86 applications for Registered Vehicle Scrapping Facilities (RVSFs) have been approved by the government till date, with 43 facilities already operational, while the remaining are scheduled to commence soon.
The Indian ELV industry is slowly becoming a formal, automated and mechanised sector with the entry of auto OEMs/steel mills-supported recycling units. Currently, there are two OEM-backed facilities operational in the country:
- Mahindra CERO, a joint venture of Mahindra Accelo and MSTC. The current recycling capacity of this facility is around 50,000 vehicles per year with units located in Delhi, Pune and Chennai. The company is planning to expand capacity to over 600,000 units in 25 different cities by 2025.
- Maruti Suzuki Toyotsu India is a JV of Maruti Suzuki and Toyota Tsusho Group. Currently, it has a capacity to recycle about 25,000 vehicles per year. It has its unit based in Noida, UP.
- This apart, Tata Motors has signed a memorandum of understanding (MoU) with the Maharashtra government to build a facility with recycling capacity of 35,000 vehicles per year. It has also planned to enter an MoU with the Gujarat government to build a recycling facility with an annual capacity of 36,000 vehicles.
State-wise facilities
The majority of the applications received indicate a keen interest from firms in the western districts of Uttar Pradesh, Haryana, etc. In UP, around 42 applications were received, constituting approximately 50% of the total applications throughout the country. To see the complete list of state wise vehicle recycling facilities, Click her
Surge in vehicle scrappage applications
As per data from the Ministry of Road Transport & Highways (MoRTH), in 2022 (from August to December), a total of 372 applications were received for vehicle scrappage. Out of these, 354 were accepted.
However, the landscape changed significantly in 2023. Last year, a staggering 20,821 applications were received. Remarkably, 19,398 of these were promptly approved, reflecting the dynamic growth in vehicle scrapping activities.
Outlook on scrap generation from ELVs
The policy is estimated to cover 51 lakh light motor vehicles (LMVs) that are above 20 years of age and another 34 lakh LMVs above 15 years of age.
In 2021, India generated about 26.5 mnt of ferrous scrap domestically, of which 30% was from end-of-life vehicles which stood at around 8 mnt.
Delhi is the hub of ELV scrap recycling in India, contributing around 1.5-1.6 mnt. Other key centres are Bangalore (0.3-0.4 mnt), and Mumbai (0.3-0.5 mnt). Cities like Kolkata, Chandigarh, Pune Chennai, Meerut etc account for a combined 0.67 mnt of total ELV scrap generation in the country.
Automobile, railways, shipbuilding, hard stocks etc. are the main sources of end-of-life vehicles. Railways generate about 3.5-4 mnt, auto about 3-3.4 mnt and shipbuilding about 1 mnt.
As per estimates, India’s ferrous scrap generation from ELVs will touch 5.30 mnt by FY’24-25 and 7.30 mnt by FY’29-30. Estimated volumes in FY’23 will be around 4.60 mnt.
The data includes scrap generation from 2- and 3-wheelers, passenger cars, commercial passenger vehicles, and commercial goods vehicles. This data is estimated considering the average vehicle life of 15 years and average steel consumption in the automobile sector.
It is estimated that ELV recycling will cover up to 30% of domestic post-consumer scrap generation by 2030.
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