Where India's Scrappage Policy Stands in 2026
India's Vehicle Scrappage Policy, announced in 2021 and phased in from 2023, is now entering its most consequential year. As of April 2026, all government-owned commercial vehicles older than 15 years have been mandatorily scrapped. Private vehicles over 20 years are next — automated fitness testing centers are now operational in 24 states, and the deadline for mandatory fitness certification of older vehicles is approaching rapidly.
The policy's impact on India's scrap metal market is already significant and will grow substantially through 2027–2030. Here's what the data shows and what it means for scrap dealers, recyclers, and vehicle owners.
Current Implementation Status
Fitness Testing Infrastructure
India has 85 operational Automated Vehicle Fitness Testing Centres (AVFTCs) across 24 states, with 140 more under construction. These centers use automated systems — brake testing, emission measurement, headlight alignment, suspension testing — removing human subjectivity from the fitness assessment. A full test takes 20–30 minutes and costs ₹300–500 for private vehicles, ₹1,000–1,500 for commercial vehicles.
Registered Vehicle Scrapping Facilities (RVSFs)
There are currently 120 registered RVSFs, with another 80 in the licensing pipeline. Major operators include Mahindra MSTC, Maruti Suzuki Toyota Tsusho, and several state-backed facilities. Capacity is estimated at 3 million vehicles per year by end-2026, though actual scrapping volumes are running at approximately 400,000 vehicles — suggesting significant capacity headroom.
Impact on Scrap Metal Supply
An average passenger car yields approximately 900 kg of ferrous metal, 50 kg of non-ferrous metals (copper wiring, aluminum components, brass fittings), 60 kg of rubber, 40 kg of glass, and 100 kg of plastics. A commercial truck yields 4,000–6,000 kg of ferrous metal.
At current scrapping volumes (400,000 vehicles/year), the policy adds approximately 500,000 tonnes of ferrous scrap and 25,000 tonnes of non-ferrous scrap annually. As enforcement tightens and more fitness centres come online, industry estimates project 1.5–2 million vehicles scrapped annually by 2028, contributing 1.5–2 million tonnes of additional ferrous scrap.
Price Impact
This new supply is moderately deflationary for iron/steel scrap in the short term. However, India's steel industry currently imports 6–7 million tonnes of scrap annually, so domestically scrapped vehicles are displacing imports rather than creating a supply glut. The net effect on dealer-level prices has been a 2–5% softening in ferrous scrap rates in cities near RVSFs, offset by stable or rising demand from construction.
What Vehicle Owners Need to Know
Incentives for Voluntary Scrapping
Vehicle owners who voluntarily scrap their old vehicles at registered facilities receive: a Certificate of Deposit (CoD) providing a 5% discount on the purchase price of a new vehicle, road tax rebate of 15–25% (varies by state), and waiver of registration fees for the new vehicle. For a ₹8 lakh car purchase, total incentives can reach ₹80,000–₹1,50,000.
Scrap Value of Your Vehicle
At current rates, a typical sedan yields ₹25,000–₹40,000 in scrap value (paid by the RVSF), while a commercial truck yields ₹1,50,000–₹3,00,000. This is in addition to the new vehicle purchase incentives above. The RVSF will deregister your vehicle with the RTO as part of the process.
What Happens at a Scrapping Facility
The process is systematic: fluids (oil, coolant, brake fluid, fuel) are drained and stored for proper disposal. Batteries are removed for lead-acid recycling. Catalytic converters are extracted (these contain platinum, palladium, and rhodium worth ₹5,000–₹15,000). Tires are removed for rubber recycling. The body is then shredded or cut, with ferrous and non-ferrous metals separated magnetically and manually.
Opportunities for Scrap Dealers
The scrappage policy creates three opportunities for existing scrap dealers: partnering with RVSFs as downstream buyers for sorted metal fractions, offering "pre-scrapping" services (removing valuable components like catalytic converters, copper harnesses, and aluminum wheels before sending to RVSF), and aggregating scrap from multiple small RVSFs for bulk sale to steel mills.
The policy is also accelerating the formalization of India's scrap ecosystem — creating standardized grading, documented material flows, and GST-compliant transactions throughout the chain. For dealers already operating formally, this is a competitive advantage over informal operators who face increasing regulatory pressure.