Engineer the End

Over the last decade, India recorded one of the highest motorisation growth rates in the world. There were over 200 million motorised vehicles registered by 2015. It is estimated that more than 8.7 million vehicles reached the End of Life Vehicles (ELV) status in 2015, out of which about 83 per cent would be two-wheelers. And by 2025, the number of ELVs is estimated to reach over 21 million. Moreover, the recent ban on diesel vehicles by the National Green Tribunal implies that more vehicles will soon end up as ELVs.

At present, such vehicles usually end up in the unorganised sector. Here, after dismantling, the auto components are either refurbished or sent for recycling. But the efficiency of material recovery is quite low as workers are not trained and lack the requisite equipment to dismantle and recycle the auto components.

While some aspects of ELV recycling are addressed by the vehicular and environmental policies as well as in the waste management rules, there are other aspects that are yet to be covered by existing laws. The Central Pollution Control Board (CPCB) recently issued guidelines to regulate the sector in an environmentally friendly manner, recommending a system of "shared responsibility" involving all stakeholders—the government, manufacturers, recyclers, dealers, insurers and consumers. The guidelines also state that if large quantities of metal and other materials present in ELVs are salvaged or recycled, it can once again be used by various sectors, thus reducing the demand for virgin raw materials.

Building a business model

A viable business model calls for putting in place the right incentives and disincentives that govern the consumption and lifestyle behaviour of citizens, fostering international cooperation, and setting up of a regulatory framework to implement the model. But there are many problems. The Automotive Industry Standard (AIS), 129, defines ELV as a vehicle which, at the discretion of its last owner, is ready to be scrapped. But since the scrapping allowance is minimal, many vehicle owners do not discard their vehicles when the government timeline expires. They, instead, sell their vehicles in rural areas or to the second-hand dealers.

For recycling to become a reality, incentives need to be provided in the form of paying the last ELV owner a salvaging price according to the value of the ELV. Here, the extended producer responsibility framework should be embedded within the ambit of shared responsibility, as propagated by the CPCB guidelines. So far, the AIS 129 does not provide guidelines for a "take back system".

Possible routes

It is important to make the customer aware of the danger—environmental, legal or related to misuse—of using the services of the unorganised sector, and provide them world-class services at their doorsteps. Also, the very definition of ELVs in India leaves a fundamental impediment—defining the average life of a vehicle. For instance, in countries such as Taiwan, China and Singapore the average life of a vehicle is 10 years or in terms of the kilometres driven, whichever comes first. This needs to be incorporated in the regulatory framework for accurate assessment of a vehicle.

On the supply side, there are many challenges—high investment costs for establishing reverse logistics networks; the cost of the quality assurance test equipment; or, the fact that some products may not have been designed to be dismantled easily for reuse. These factors can fail the business case for reuse, remanufacture and recycling. There is also an urgent need to formulate rules which mandate automobile manufacturers to frame the Standard Operating Procedures (SOPs) to dismantle every model and type of vehicle, which would encourage them to reconsider the material while making new automobiles.

The SOPs could then be shared with the semi-formal sector, which would enhance the efficiency in the recycling process. Streamlining the unorganised sector is extremely important. AIS 129 standards need to be incorporated in the regulatory framework to ensure compliance by the unorganised sector, where most of the recycling is done. But the material recovery rate in this sector is low, and compliance with AIS 129 will help enhace material use efficiency.

Further, the non-availability of facilities such as the National Automotive Testing and R&D Infrastructure Project in each hub does not serve the requirements of small and medium-sized auto component manufacturers. Such centres are critical to train personnel who could then dismantle scientifically, thereby leading to better resource recovery. Before the government implements the National Electric Mobility Mission 2020, it needs to set up high-grade recycling units to recover lithium, cobalt and other metals used in traction batteries, which is important from an ecological point of view.

Step-by-step

Vital ingredients need to be developed to make this business model a viable one. First, the setting up of collection centres, which would collect vehicles from owners and carry out the deregistration process. Second, the setting up of de-pollution centres to remove hazardous materials from the vehicles. It will also be their responsibility to safely dispose the harmful materials.

Third, shredding centres should be set up, which would segregate materials for recycling. Automotive shredder residue should be sent to incineration plants for energy recovery. Lastly, vehicles about to be scrapped often have reusable parts. These parts can be separated at the de-pollution units and could be sold to retailers or to used-part dealers. Importantly, a mechanism needs to be put in place that offers the right economic incentives to garner the support of both consumers and manufacturers for the effective management of ELVs in India.