Informal scrap yards, paperwork gaps thwarting vehicle scrappage policy: Auto OEMs

Friction in customer documentation, an unorganized intermediary network, and a convenience deficit are hobbling India’s formal vehicle scrappage ecosystem, industry executives said on Tuesday, pitching Artificial Intelligence (AI) as the key driver to clean up the sector.

Speaking at a panel discussion during the World Circular Economy Forum (WCEF) 2026 in Gujarat’s State capital Gandhinagar, leaders from Tata Motors and Mahindra & Mahindra outlined the operational bottlenecks holding back Registered Vehicle Scrappage Facilities (RVSFs). Highlighting the massive market size for domestic recycling, MS Anand Kumar, AVP and Head at TVS Motor Company, revealed that vehicles manufactured in India between 2005 and 2023 hold an estimated 98 million tonnes of recoverable steel.

“AI has an opportunity in the Indian vehicle scrappage context. It is a fragmented industry with thousands of players, largely informal, and there is a large pool of vehicles on the roads that needs to be replaced,” said Prasad Phadke, Senior General Manager at Tata Motors Ltd. Despite scaling infrastructure — such as Tata Motors’ ‘Rewire’ network operating around 12 facilities with a capacity exceeding 2,00,000 dismantlings annually — formal centres struggle to attract end-of-life vehicles (ELVs).

“Today there is greater inconvenience and hence reluctance from customers to come to a registered facility,” Phadke noted. “They probably end up scrapping at a nearby centre that is unregistered, does not ask for documentation, and does not operate in a systematic way.” Phadke detailed how AI can bridge these ecosystem gaps through a two-tiered model. He said AI algorithms can be used to locate ageing vehicles, deploy automated customer outreach, assist in retrieving missing paper trails, and automate government registry compliance. Similarly, on-site AI and vision systems can prioritise inbound vehicle streams, track stored components, and identify material compositions to unlock site efficiencies.

Senthilkumaran Varatharajan, Senior General Manager at Mahindra & Mahindra, cautioned that circularity must begin on the drawing board. “If your product design does not have the sustainability element built into it, you have a disaster at hand when it comes to end-of-life,” Varatharajan said. He highlighted that data harvested by AI during dismantling — such as corrosion rates, reusable parts, and hazardous substances like brominated polymers or chromium — must be fed back into OEM design loops to extend product longevity and refine material standards.

Varatharajan also pointed to severe supply constraints for recycled materials. “Today, with initiatives like Mahindra’s Cero, our entire year’s scrap collection can be consumed for just one component line, like door pads. The biggest question is whether circular materials will be available at scale. AI in dismantling networks can offer real-time data on supply quantity and quality,” he added. With all ecosystem players currently operating in silos, panelist consensus called for an AI-integrated data backbone to link owners, unorganised collectors, RVSFs, and automakers into a compliant, closed-loop economy.

Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.

We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.