India’s Vehicle Scrapping Policy: What Businesses Need to Know

Updated: May 25, 2026 · 16 min read

India has an estimated 5 million end-of-life vehicles (ELVs) on its roads today, according to figures cited by the NITI Aayog in its circular economy framework. Many are diesel trucks operating well past the 15-year threshold that now determines their legal fitness. When the Union Cabinet formally approved the vehicle scrapping policy and the Ministry of Heavy Industries notified the Motor Vehicles (Registration and Functions of Vehicle Scrapping Facility) Rules, 2021, it triggered a compliance obligation — not merely a policy aspiration — for every large fleet operator, auto dealer, and government body running ageing vehicles. Understanding the vehicle scrapping policy India mandates is no longer optional for procurement heads, logistics directors, or transport compliance officers.

The 2021 Rules That Triggered India’s ELV Reckoning

The foundational legal instrument governing vehicle scrapping in India is the Motor Vehicles (Registration and Functions of Vehicle Scrapping Facility) Rules, 2021, notified by the Ministry of Road Transport and Highways (MoRTH) under powers vested by the Motor Vehicles Act, 1988. These Rules establish the regulatory architecture for Registered Vehicle Scrapping Facilities (RVSFs), define the Certificate of Deposit (COD), and prescribe the documentation chain from vehicle surrender to final recycling.

Layered on top is the amended Central Motor Vehicles Rules, 1989, which sets the age-based cut-offs that determine when a vehicle loses its right to fitness renewal. Together, these two instruments create a binding compliance framework. The Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016 — administered by the Central Pollution Control Board (CPCB) — also apply to the handling of automotive fluids, lead-acid batteries, and catalytic converters extracted during the depollution phase at an RVSF. Any scrapping facility that processes these materials without a valid authorisation under the Hazardous Waste Rules is operating illegally, regardless of its RVSF registration.

The policy has been a long time coming. A Voluntary Vehicle Fleet Modernisation Programme was mooted as early as 2016, but it lacked teeth because it had no statutory instrument behind it. The 2021 Rules changed that calculus entirely. For the first time, scrapping is tied to a registration-fee incentive, a structured document trail, and an enforcement mechanism via the fitness certificate regime.

Age Cut-Offs, Fitness Tests and the Hard Legal Deadlines

The age-based disqualification thresholds are unambiguous. Under the amended Central Motor Vehicles Rules, 1989:

• Government and PSU vehicles: Mandatory deregistration after 15 years, enforceable from 1 April 2022.
• Heavy commercial vehicles (HCVs) and medium commercial vehicles (MCVs): Fitness certificate renewal denied after 15 years of age.
• Private passenger vehicles: Automated Fitness Test (AFT) mandatory after 20 years; re-registration subject to passing the test every 5 years thereafter.
• Light commercial vehicles (LCVs): Fitness test required every year after the first 10 years; post-15 years, continuation is effectively impractical.

The Automated Fitness Test (AFT) is conducted at Ministry of Road Transport and Highways-designated testing stations — not at RVSFs. A vehicle that fails the AFT cannot legally ply on public roads. Critically, for fleet operators, the operational cost of running a vehicle to the AFT stage only to have it fail represents a sunk cost that could have been converted into the Certificate of Deposit incentive had the vehicle been surrendered voluntarily to an RVSF earlier.

Delhi-NCR presents the sharpest enforcement context. The National Green Tribunal (NGT) and the Commission for Air Quality Management (CAQM) have both issued orders prohibiting diesel vehicles older than 10 years in the National Capital Territory. This is stricter than the national baseline and has direct implications for any fleet with Delhi-based operations. Fleet managers in Punjab, Haryana, and UP who route vehicles through Delhi need to track the CAQM restriction separately from the national cut-off under the MoRTH framework.

What Is a Registered Vehicle Scrapping Facility (RVSF) — and Why It Matters

An RVSF is a facility authorised by the state transport authority and registered with the MSTC Ltd-managed government platform (or the state-designated portal) to receive end-of-life vehicles, depollute them, and issue the legally valid Certificate of Deposit. Only a registered RVSF can issue a COD that triggers the registration-fee waiver. A vehicle surrendered to an unregistered scrapyard — however large or well-run — produces no COD, no incentive, and may expose the surrendering party to liability under the Hazardous and Other Wastes Rules, 2016 for improper disposal of regulated automotive waste streams.

As of FY 2024–25, the Ministry of Heavy Industries has approved over 60 RVSFs across India. Maharashtra hosts several of the most active facilities, including operations in Pune and Nashik. Gujarat (Ahmedabad, Surat), Haryana (Gurugram), and Tamil Nadu (Chennai) are the other high-density states. However, coverage remains thin in the eastern and north-eastern states, creating a logistical gap for fleet operators running vehicles in those corridors.

The depollution process at a compliant RVSF involves the removal and safe disposal of engine oil, transmission fluid, brake fluid, coolant, fuel, air-conditioning refrigerants, and lead-acid batteries before any shredding or dismantling begins. This is not optional — it is mandated by the RVSF Rules, 2021 and reinforced by the Hazardous Waste Rules, 2016. The shredded ferrous and non-ferrous scrap that emerges from this process feeds directly into the secondary metals market. Steel scrap from ELVs is graded as shredded scrap (HMS equivalent) and priced accordingly — rates in Maharashtra yards have ranged between ₹28–₹35 per kg for automotive shredded scrap in the 2024–25 financial year, depending on the proportion of non-ferrous contamination.

The Certificate of Deposit: The Commercial Incentive Most Fleets Are Missing

The Certificate of Deposit (COD) is the document issued by an RVSF acknowledging that a specific vehicle (identified by chassis number and registration) has been surrendered and depolluted. The COD is the trigger for a cascade of financial incentives prescribed under the vehicle scrapping policy India has built:

• Registration fee waiver: Up to 25% waiver on the registration fees payable for a new vehicle purchased in lieu of the scrapped one. Several states — including Maharashtra, Gujarat, and Himachal Pradesh — have added a further 25% road-tax rebate on top of the central waiver, making the effective incentive up to 50% of applicable taxes for new vehicle purchase in those states.
• Scrap value payment: The RVSF pays the vehicle owner the prevailing scrap value of the vehicle’s materials — typically calculated on the basis of the ferrous content at current market rates.
• Insurance premium benefit: The Insurance Regulatory and Development Authority of India (IRDAI) has signalled discounted third-party insurance premiums for owners surrendering an old vehicle, though the detailed circular operationalising this is still awaited.

For a large logistics company operating, say, 200 heavy commercial trucks that are approaching the 15-year threshold, the aggregate registration-fee benefit on 200 replacement vehicles is not trivial. At an average road-tax of ₹1.5–₹2 lakh per HCV, a 25% waiver across 200 vehicles translates to savings of ₹75 lakh to ₹1 crore. Most logistics CFOs we speak to have not yet modelled this into their fleet replacement cycles — a significant gap in financial planning.

The COD is vehicle-specific and non-transferable, but it is valid for use at any dealership within the country. The COD does not expire, which means fleet operators can surrender vehicles in batches and accumulate CODs for deployment at the point of fleet renewal. This flexibility makes early surrender — before the fitness certificate expires — a financially rational decision rather than a compliance concession.

Regulatory Rates, Incentives and Fine Slabs at a Glance

The table below consolidates the key thresholds, incentives, and applicable regulatory provisions relevant to the vehicle scrapping policy India framework. Fleet operators and compliance teams should retain this for internal reference during procurement and fleet planning cycles.

Parameter	Detail	Source / Authority
Govt/PSU vehicle scrapping cut-off	15 years, mandatory from 1 April 2022	MoRTH / Central Motor Vehicles Rules, 1989
HCV/MCV fitness cut-off	15 years (fitness renewal denied)	Central Motor Vehicles Rules, 1989 (amended)
Private petrol vehicle AFT trigger	20 years from date of registration	Central Motor Vehicles Rules, 1989 (amended)
COD registration-fee waiver	Up to 25% (central); up to 25% additional road-tax rebate (select states)	MV (RVSF) Rules, 2021 / State notifications
ELV automotive shredded scrap rate (Maharashtra, FY 2024–25)	₹28–₹35 per kg	Prevailing market (RVSF-sourced)
Hazardous fluid disposal compliance	Mandatory at RVSF prior to shredding	Hazardous Wastes Rules, 2016 / CPCB
Approved RVSFs (pan-India, FY 2024–25)	60+ facilities	Ministry of Heavy Industries
Lead-acid battery handling	Must be routed to authorised recyclers under Battery Waste Management Rules, 2022	CPCB / MoEFCC

2024–25 Enforcement Tightening: What Has Changed

The vehicle scrapping policy India framed in 2021 was, for its first two years, largely self-policed. Enforcement was patchy, RVSF capacity was nascent, and the COD incentive chain had operational teething issues. That picture shifted materially in 2024–25. The Ministry of Road Transport and Highways issued updated directives to state transport departments emphasising stricter action against unregistered scrapping operations, and several state governments — Maharashtra and Gujarat most prominently — began cross-referencing vehicle registration databases to flag over-age vehicles that had not been surrendered.

Separately, the Battery Waste Management Rules, 2022, notified by MoEFCC, introduced a specific Extended Producer Responsibility (EPR) framework for lead-acid batteries extracted from ELVs. Battery manufacturers and importers now carry EPR obligations for battery collection and recycling — and those obligations dovetail directly with RVSF operations, since every scrapped vehicle yields at least one lead-acid battery. Any RVSF or downstream recycler that fails to route these batteries through a CPCB-authorised channel is in breach of both the Hazardous Wastes Rules, 2016 and the Battery Waste Management Rules, 2022 simultaneously.

There is also a growing BRSR (Business Responsibility and Sustainability Reporting) dimension. Listed companies with large captive fleets — FMCG distributors, e-commerce logistics operators, cement and steel majors — are increasingly expected to report on fleet scrapping as part of their Principle 6 disclosures (responsible value chain practices) under SEBI’s BRSR framework. Sustainability auditors are beginning to ask for COD documentation as evidence of responsible end-of-life vehicle disposal. Companies that have been offloading ageing vehicles to informal aggregators without CODs will find this gap increasingly difficult to paper over in annual reports.

The NITI Aayog‘s 2024 circular economy report specifically flagged ELV recycling as an area where India recovers less than 40% of reusable material value, compared to a global benchmark of 75–85%. This gap feeds directly into the government’s push to scale up RVSF approvals and tighten enforcement through 2025–26.

The 7-Step Compliance Checklist for Fleet Operators and Auto Dealers

Whether you are a logistics company managing a fleet of 50 trucks in Maharashtra, a state government department with a pool of ageing official vehicles, or an auto dealer accepting trade-ins, the following steps should be completed this financial year. The vehicle scrapping policy India has built is no longer a future obligation — it is a present one.

1. Audit your fleet by registration date. Produce a complete register of all vehicles with registration dates, sorted by age. Flag every vehicle crossing the 15-year mark before 31 March 2026. Do not wait for the fitness certificate renewal notice — that is reactive compliance, not proactive compliance.
2. Verify RVSF availability in your operating region. Cross-check the Ministry of Heavy Industries’ approved RVSF list for your state. If no RVSF operates within logistically feasible distance, plan vehicle movement to the nearest registered facility. Keep documentary evidence of the logistical plan.
3. Confirm the RVSF’s CPCB authorisation status under the Hazardous Wastes Rules, 2016. An RVSF registration without a corresponding Hazardous Waste authorisation for automotive fluids and battery handling is a compliance risk. Ask for the authorisation certificate before surrendering any vehicle.
4. Collect and securely archive the Certificate of Deposit (COD). The COD is a legal document tied to a specific chassis and registration number. Maintain a COD register and ensure it is stored for a minimum of 5 years for audit purposes — consistent with standard vehicle record-retention norms under the Motor Vehicles Act, 1988.
5. Apply the COD benefit at point of vehicle replacement. Brief your procurement or fleet replacement team on the 25% registration-fee waiver mechanism. Co-ordinate with the dealership before invoice generation so the waiver is applied correctly. In Maharashtra, Gujarat, and Himachal Pradesh, additionally claim the state-level road-tax rebate simultaneously.
6. Route lead-acid batteries and automotive fluids to authorised recyclers. Even if your RVSF handles depollution, verify downstream disposal. The Battery Waste Management Rules, 2022 impose EPR-chain obligations, and ignorance of downstream disposal is not a defence in enforcement proceedings. Obtain a recycling certificate for batteries separately.
7. Incorporate COD data into your BRSR Principle 6 disclosures (if listed). Quantify the number of ELVs scrapped, total CODs obtained, and tonnage of ferrous and non-ferrous material recovered. This closes the loop between operational compliance and sustainability reporting, and pre-empts auditor queries in your next annual report cycle.

Frequently Asked Questions

What exactly is a Certificate of Deposit under the vehicle scrapping policy?

A Certificate of Deposit (COD) is a document issued exclusively by a Registered Vehicle Scrapping Facility (RVSF) under the Motor Vehicles (Registration and Functions of Vehicle Scrapping Facility) Rules, 2021. It confirms that a specific end-of-life vehicle — identified by chassis number and registration — has been lawfully surrendered, depolluted, and accepted for scrapping. The COD is the trigger for a registration-fee waiver of up to 25% on a replacement vehicle. Only RVSFs on the Ministry of Heavy Industries’ approved list can issue a legally valid COD. Documents issued by unregistered dismantlers carry no legal standing.

Can a private petrol car older than 20 years still be driven legally in India?

Under the amended Central Motor Vehicles Rules, 1989, a private petrol vehicle older than 20 years must undergo an Automated Fitness Test (AFT) at a designated testing station. If it passes, it may continue — but re-testing is required every 5 years. Practically, most vehicles of that age fail the emission and structural benchmarks of the AFT. In Delhi-NCR, Commission for Air Quality Management (CAQM) orders impose a stricter 15-year diesel and 10-year diesel (NCT-specific) cut-off, which overrides the national baseline for vehicles operating in that zone. Operating a non-compliant vehicle is a cognisable offence under the Motor Vehicles Act, 1988.

Are automotive batteries from scrapped vehicles subject to separate regulations?

Yes. Lead-acid batteries extracted during vehicle depollution are governed by the Battery Waste Management Rules, 2022, notified by MoEFCC. These Rules impose Extended Producer Responsibility (EPR) obligations on battery producers and recyclers, and require that spent batteries be routed exclusively to CPCB-authorised recyclers. Simultaneously, they qualify as hazardous waste under the Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016. An RVSF that transfers batteries to an unauthorised aggregator is in breach of both sets of rules and risks cancellation of its RVSF registration.

How does the vehicle scrapping policy affect listed companies’ BRSR reporting?

Listed companies are required to file Business Responsibility and Sustainability Reports under SEBI’s BRSR framework. Principle 6 of the BRSR requires companies to disclose environmental impacts across their value chain, which includes fleet disposal. Sustainability auditors increasingly require COD documentation as evidence that ELVs were disposed of responsibly rather than sold to informal dismantlers. Companies that cannot produce CODs for fleet disposals risk adverse observations in their BRSR disclosures and, increasingly, from ESG rating agencies that feed into institutional investor decisions. The EPR and compliance documentation services offered by specialised recyclers can help bridge this gap.

Who regulates RVSFs at the central level, and what happens if a facility is found non-compliant?

RVSFs are registered by state transport authorities but operate under the framework set by the Ministry of Road Transport and Highways (MoRTH) and, for hazardous waste aspects, under the oversight of the Central Pollution Control Board (CPCB). A non-compliant RVSF — one that, for instance, fails to properly depollute vehicles or mishandles hazardous fluids — can have its registration cancelled and face prosecution under the Environment (Protection) Act, 1986. CODs issued by a subsequently de-registered RVSF may be invalidated, directly affecting vehicle owners who surrendered vehicles there. Verifying an RVSF’s current registration status before surrender is therefore essential due diligence.

Work With The National Recycling Corporation

The National Recycling Corporation is a Mumbai-headquartered, pan-India scrap trading and recycling company with operational presence across Maharashtra, Gujarat, Delhi-NCR, Tamil Nadu, Karnataka, and Telangana. We work with fleet operators, government departments, auto dealers, and logistics companies navigating the vehicle scrapping policy India framework — from initial fleet age-audits through to RVSF coordination and downstream materials recovery.

Our downstream processing partners hold current CPCB authorisations for hazardous waste handling under the Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016, and are aligned with Battery Waste Management Rules, 2022 for lead-acid battery recovery. Every transaction is supported by GST-compliant invoicing, a Certificate of Recycling or Certificate of Destruction (as applicable), and BRSR-grade documentation — a full audit trail that satisfies both internal compliance teams and external sustainability auditors. Metal pricing for ELV-derived ferrous and non-ferrous scrap is benchmarked to prevailing market rates, ensuring you receive fair-market value.

We understand the operational reality of large fleet scrapping — the logistical coordination, the documentation chain, and the tight timelines imposed by fitness renewal deadlines. Our team can work with your fleet or procurement department to build a phased scrapping schedule that maximises COD benefits, minimises operational disruption, and keeps your compliance paper trail clean. To discuss your fleet’s specific requirements, contact us directly. You can also learn more about our background, credentials, and pan-India operations on our website.

• Pan-India fleet scrap pickup and RVSF coordination
• CPCB-authorised downstream disposal for hazardous automotive waste streams
• GST-compliant invoicing with full HSN documentation
• Certificate of Recycling / Certificate of Destruction for BRSR and audit purposes
• Fair-market ELV scrap pricing for ferrous and non-ferrous materials
• EPR documentation support for lead-acid battery recycling obligations

Related Articles

• Understanding CPCB Guidelines for Recycling Businesses in India
• Bulk Scrap Buyers in India: How to Negotiate the Best Price
• Recycling vs Landfill: The True Cost Comparison for Indian Businesses

Sources and References

• Ministry of Road Transport and Highways (MoRTH) — Vehicle Scrapping Policy and RVSF Rules, 2021
• Ministry of Heavy Industries, Government of India — Approved RVSF List and Policy Updates
• Central Pollution Control Board (CPCB) — Hazardous and Other Wastes Management Rules, 2016
• Ministry of Environment, Forest and Climate Change (MoEFCC) — Battery Waste Management Rules, 2022
• NITI Aayog — Circular Economy Framework and ELV Recovery Benchmarks
• MSTC Ltd — Government-Mandated Vehicle Scrapping Platform
• Ministry of Steel, Government of India — Secondary Steel and Scrap Policy
• Press reports: Business Standard and Economic Times coverage of RVSF capacity expansion and enforcement developments, FY 2024–25