India's auto industry needs a sustainable scrappage policy
Existing scrap yard hubs will not be able to handle the sheer volume of discarded cars in the coming years.
These cars were used to dump empty liquor bottles or doubled as storage space for street-side vendors. The abandoned vehicles ate into public parking spots, too. The group had had enough. In August, it decided to do a count of the cars and take pictures. There were 52 cars in all, and after its efforts were reported by Mumbai Mirror, the municipal corporation removed half the cars within three months. But when the residents did another survey last month, they found that more cars had been abandoned in the locality. The count now was 45.
Cars or bikes on the side of roads, with missing parts and covered in an inch of dust, are a common sight across Indian cities. As more vehicles becoming obsolete in the coming years — partly due to stricter government regulations on emissions — the number of vehicles being abandoned like this would only increase.
One major reason for the problem is that India does not have a scrapping or recycling policy for vehicles, even though the country is the world’s fourth largest car and light commercial vehicle market by volume and also the largest two-wheeler market by volume. Nearly 25 million vehicles were sold in India in 2017-18, more than 80% of which were two-wheelers and 13% were passenger vehicles, according to the Society of Indian Automobile Manufacturers. In 2016, India had 230 million registered motor vehicles, according to the latest data from the ministry of road transport and highways. The number of vehicles per 1,000 persons has tripled since the turn of the century to 167.
According to an estimate by the Central Pollution Control Board (CPCB), GIZ, a German development agency, and Chintan, an NGO, there were 8.7 million obsolete vehicles, also called endof-life vehicles (ELVs), in 2015. That figure will increase 2.5 times to 22 million in 2025, given that the average lifespan of a vehicle is 10-15 years.
Some used vehicles end up in scrap yards. But even at these yards, workers use crude and unscientific methods to dispose vehicles. Such practices pose a danger to health and environment. The sector needs to be regulated if India wants to avoid a disaster.
There have been efforts to increase vehicle ownership. But steps to improve infrastructure to support a growing fleet or a sustainable method of junking have been inadequate. Older cars, despite being more polluting and less fuel-efficient than their new counterparts, still find buyers. For every new car purchased, one used car is sold in India, says a Mordor Intelligence report published in May 2018. The market for used cars in India is expected to reach $75 billion by 2023, recording a CAGR of 15.2% during the period, it added. This gives a magnitude of the problem that the country is set to face if a relevant policy is not put in place soon.
Obsolete vehicles not abandoned haphazardly make their way to scrap yards in places such as Mayapuri in New Delhi, Kurla in Mumbai and Shivajinagar in Bengaluru. There, the vehicles are taken apart. It takes just half an hour for two guys to dismantle a two-wheeler and four hours to dismantle a car. Valuable parts — like the engine, battery, tyres, wipers and clutch plate — are sold. These parts can fetch a profit of 30-70%, according to a 2012 study by Chintan, an NGO, and GIZ. Steel and plastic scraps are also sold to recyclers of those materials.
Hollowed-out cars and skeletons of bikes are common sights at scrap yards like the one at Kurla. Workers hammer away at cars with no protective gear and toss the parts into a corner. Whatever does not find takers is just dumped indiscriminately. For instance, according to the CPCB report, non-functional switches, brake shoes and rubber parts are usually thrown away carelessly — releasing asbestos, mercury and several other pollutants. Liquids like coolant, brake and hydraulic fluids are just drained on the ground. These contaminate groundwater and the air.
A vehicle has around 3,000 components. Around three-quarters of a vehicle are metals and the rest are plastic, rubber, glass, etc. “About 25% of the waste material coming from an ELV poses a potential environmental threat, due to the presence of heavy metals, waste oils, coolants, ozonedepleting substances, etc,” adds the CPCB report.
A lot of these materials can be reused if there is proper salvaging. The auto recycling industry in the US and Canada provides enough steel each year to make nearly 13 million new vehicles, says Advanced Remarketing Services, a technology company focused on the remarketing and automobile recycling sector.
Ravi Batra, who works as an intermediary between vehicle owners and scrap dealers in Mayapuri, says the vehicles that land there are often not deregistered. These vehicles are sometimes sold to buyers from other states. “While the owner in, say, Delhi thinks his car has been scrapped, it might be in use in Punjab or UP. The owner will come to know of this only when the car is involved in an accident or is linked to a crime.”
Even if conscientious car owners do not want to send their old vehicles to Mayapuri or Kurla, they have little choice. That could change with Cero Recycling. A joint venture between Mahindra Accelo, a step-down subsidiary of Mahindra & Mahindra, and state-owned MSTC, Cero is the country’s first organised vehicle recycler and started operations at its five-acre Greater Noida facility around June 2018. Unlike the traditional scrap yards, the process at Cero is automated, where all the liquids are sucked out into separate containers and then sent to authorised recyclers. Airbags are blown up and engines bored to avoid reuse. Cero recycles around 100 vehicles a month and will open a facility in Chennai next month. Other cities on its radar are Bengaluru, Hyderabad, Kolkata and Mumbai. “We have designed this to be sustainable and profitable,” says Sumit Issar, managing director of Mahindra Accelo. He adds that Cero is looking at recycling 70-80% of a vehicle.
Cero claims to offer rates comparable with those offered by scrap dealers. That could be a big factor in convincing car owners to choose Cero, considering that for most people, money could trump environmental concerns.
The Union government has been working on a scrappage policy for a while. Questions sent to Nitin Gadkari, minister for road transport and highways, were unanswered.
The Delhi government had in August 2018 announced guidelines for vehicle scrapping. Among the requirements is a scrap yard of at least 9,000 sq ft in a non-residential/commercial area, and equipment for depolluting vehicles, which makes the scrap dealers of Mayapuri and such places ineligible.
The existing scrap yard hubs will anyway not able to handle the sheer volume of ELVs in the coming years. “The biggest problem in recycling is space. It now happens in the heart of cities. Recycling scientifically needs space,” says NS Mohan Ram, advisor to TVS Motors and author of a book on vehicle recycling. He believes automakers should issue dismantling instructions soon after the launch of a model.
Owing to Delhi’s alarming pollution levels, the Supreme Court in October banned the plying of diesel vehicles older than 10 years and petrol vehicles older than 15 years in the National Capital Region. The order was in line with a National Green Tribunal directive of April 2015.
These are city-specific norms, says Anumita Roychowdhury, executive director of research at the Centre for Science for Environment, and obsolete vehicles will be taken to other cities to bypass the rules. Central to the scrappage policy should be norms on the recyclability of components, which is the first step in sustainability. “We should close the entire loop for it to work,” adds Roychowdhury.
India could learn from the recycling policies in the European Union, Japan, China and Korea. The EU mandates that 95% of the weight of an ELV should be recycled, while Japan has specific requirements for recycling of airbags and automobile residue. Vehicles owners in Japan also have to pay a recycling fee while buying a new car.
The government should mandate that every manufacturer sets up one or two recycling facilities, says Shekhar Viswanathan, vice-chairman of Toyota Kirloskar Motor. “Then the pricing of vehicles will encompass that cost.”
This is one way to enforce extended producer responsibility (EPR). India introduced EPR in its Plastic Waste Management Rules, 2016, according to which plastic producers, importers and brand owners like fast-moving consumer goods companies will have to assist in the collection of plastic waste they introduce into the market. It is still a matter of debate if auto companies should get into recycling themselves or supporting recyclers.
A Hyundai Motor India spokesperson says a well-defined scrappage policy “will help us explore opportunities for safe disposal of old vehicles.” Bajaj Auto and Tata Motors declined to comment for the story and Hero MotoCorp and Maruti Sukuzi did not respond to our queries.
Once a scrappage policy is in place, vehicle recycling is sure to attract entrepreneurs, given the sheer size of the market and the growth potential. But the bigger challenge is what happens to the unorganised sector — Mayapuri alone has 3,000 shops, according to one estimate — where there are thousands of jobs at stake. They do not have space or technology to be authorised recyclers, which means the policy will have to balance environmental sustainability and livelihood.