Dig 30 feet anywhere in the Pudupet area of Chennai and you will strike oil! This is how a grimy enclave of the southern city is often referred to, in mirth, by those in the auto cluster.For four decades, hole-in-the wall businesses specialising in dismantling and scrapping of old vehicles have drained out copious amounts of engine, gear oils from old clunkers directly into the ground, unmindful of what it does to the water table and the environment . The talk of an oil reservoir underneath Pudupet stems from the evolution of the place.It is estimated that nearly a hundred end-of-life vehicles (ELVs) are stripped in Pudupet on any given day. It’s not the only one. There are several such informal, unregulated clusters across the country — Kolkata Pune , Jamshedpur, Indore — which have turned into throbbing hubs for scrap metal and all sorts of recovered and refurbished automobile parts. Mayapuri in Delhi alone employs over 30,000 people engaged in recycling vehicle parts.This, unfortunately, is how India deals with its old vehicles when Europe , US and Japan have robust process for de-registering ELVs with dismantling units working in tandem with industry and government. Sweden had put in place an elaborate car scrappage law way back in 1975. In India there is no ELV policy or law and no scrappage infrastructure — vehicle inspection and certification (I&C) networks for fitness testing and dismantling units — in the organised sector. Roadside scrap recyclers deal with the issue in their own unique, often polluting, ways. It is only now the government is waking up to environmental and related issues thrown up by the auto industry, prompted by a citizenry reeling under poor air quality in our cities . The date for kick-in of Euro VI emission norms has been advanced to 2020 recently but the knee- jerk moves only raise more questions.What’s the point in introducing more efficient and less-polluting vehicles that will run on better fuels when tired, old polluting vehicles continue to clog our roads?“We have been asking for a car scrappage policy since the last eight years,” says Vishnu Mathur, director general, Society of Indian Automobile Manufacturers (SIAM.) “If it’s not done quickly, all the advantage of higher norms in fuels will be frittered away.” A challenge of huge proportions is slowly building up. The number of registered vehicles in India is around 160 million (2014) and growing rapidly. A sizeable portion obviously is obsolete.A 2015 survey by the GIZ and the Central Pollution Control Board (CPCB) has computed the obsolescence rate for each category of vehicles (see chart) in India. The magnitude of the problem is stark. Based on vehicles sold over a decade and a half, it is estimated that 87 lakh vehicles would have reached ELV status or obsolescence in 2015. Projection for 2025 is 2.18 crore vehicles.The study defines obsolescence as a ‘state where a product, service or a practice finds no more use for the user, even if still functional.’ Obsolescence occurs if a replacement is readily available in the market , or if the repair cost for the product, or its running cost, is higher than the cost of purchasing a new product.It is not that car manufacturers in India are oblivious to the situation. Many, as players in the global market , have adopted European ELV norms. Maruti Suzuki designed and launched the A- Star in 2008 as a global car with a focus on Europe. The ELV norms in EU stipulate that a vehicle be built for recoverability (95%) and recyclability (85%) including parts reuse. “All our models are now ELV compliant,” says CV Raman, executive director, design, engineering and R&D, Maruti Suzuki.Over the past few years, the company has engaged in creating an entire supply chain to adhere to the ELV norms. Items like lead, mercury, asbestos have been banished. The most difficult was the changeover in the electroplating process for metal components where salts and processes were painstakingly changed and altered. All Maruti Suzuki vehicle materials have been now brought into the global International Material Data System (IMDS).“All our parts are recyclable; otherwise we couldn’t have met the EU norms of 95%,” says Raman who is also pushing for a set of Indian guidelines on ELV and also the creation of an ecosystem for scrapping of ELVs. “The government should mandate. We can do it together but what we need is a clear road map.” He also indicates that the industry could support recycling entrepreneurs. Adhering to ELV design and material norms is one thing. The new-age car may be recycleready but the big question for India is where is the infrastructure to deal with retiring vehicles? It’s non-existent, barring a dismantling demo- centre at the Global Automotive Research Centre near Chennai. The ministry of heavy industries is in the process of setting up half a dozen I&C centres when the numbers should have been in several scores or hundreds for a country of our size.The issue, however, is finally gaining some traction. The SIAM has presented an ELV or ‘Modern Fleet’ proposal to the ministry of road transport and highways earlier this year even as minister Nitin Gadkari hints at the possibility of extending incentives — excise duty cuts when purchasing a new vehicle to owners who scrap their old vehicles.A group of ministers (GoM) from states is also engaged in formulating a mobility plan. It was recently reported that the GoM was keen on phasing out ‘commercial’ vehicles after eight years of service. Simultaneously, a fairly elaborate Automotive Industry Standards (AIS) 129 which is focused on ELVs is being tweaked by the government in consultation with various stakeholders.SIAM’s fleet replacement proposal envisage a benefit to the country of about Rs 97, 300 crore if implemented and rests on the premise that a system of incentives is ideal than a mandate for vehicles be replaced after a certain age or years of use. The proposal is pitched as a limited-time incentive scheme to retire old vehicles till a proper I&C and dismantling network emerges in the country.The proposal identifies the MSTC as the dismantling anchor. The idea is to aim for the scrapping of all vehicles registered between April 1990 to March 2000; over 30.55 million of them. A 50% excise duty incentive to owners is computed.The incremental revenue generated by the government from this project is expected to be Rs 32,000 crore (see tables ).Monetary benefits to the vehicle user come from two streams — the excise duty incentive and 85% of the scrap value of vehicle.The remaining 15% is taken by the car dealer who facilitates the process. A car owner thus mops up around Rs 50,000 and a commercial vehicle owner around Rs 1,50,000.Scrapping of tottering old vehicles will also lead to considerable fuel savings due to better fuel efficiency; this alone is expected to be 7.52 billion litres worth, at Rs 41, 335 crore. If all auto scrap (12.85 million tonnes) generated is used to produce crude steel (11.68 million tonnes) through the secondary process, savings in raw materials — iron ore , coal and limestone — will be around Rs 17,108 crore.The secondary process of steel production, against the primary blast furnace process, is also less carbon intensive; 0.28 tonnes of carbon against 2.5 tonnes for every tonne of steel produced.Interestingly, India also imports around 5 to 6 million tonnes of ferrous, shredded scrap per annum due to shortage of quality steel scrap in the country. Savings in foreign exchange by replacing imported scrap is expected to be Rs 23,965 crore.SIAM apparently has made a strong case for retiring of old vehicles and modernising India’s fleet with enticing numbers. As an auto lobby group it has done quite well but what is missing is the reluctance of the Indian auto industry to adopt extended producer responsibility (EPR) which is the fulcrum of most ELV laws including the one in EU.Japan has a ‘shared responsibility’ principle in place where a consumer, when buying a car, pays an upfront recycling fee which is managed by a third party — the Japan Automobile Recycling Promotion Centre (JARC.) EPR is an approach in which a producer’s responsibility for a product is extended to the post- consumer stage of a product’s lifecycle. In this context, it would mean an auto company individually, or collectively, fostering a mechanism for taking back used vehicles for eventual recycling.Raman, though circumspect, doesn’t rule out EPR. “EPR can be taken if there is a mandate. That level of thinking has to be built across the board. Methods and processes have to emerge and I don’t see that happening,” he says. The Indian ELV regulation taking shape doesn’t give much space to EPR as the Indian auto sector states it’s not yet mature enough.The draft AIS 129 also doesn’t provide play for reuse and re-manufacturing of auto parts especially when circularity and ‘closing the loop’ are topics of sustainability debates at present. Many companies however are responding.Nissan not only has a recycling promotion department where it conducts dismantling research but has also put in place a system for recovering good auto parts and re-selling them as ‘ Nissan Green Parts’ for 1/3rd to 1/5th the price of new parts. These reusable and rebuilt parts include engine and transmission parts. India’s draft rules go the other way and prohibit the sale of components from old vehicles for reuse in the after-sales market.Renault in Europe has been a circularity champion. The company, working in partnership with a plastics compounder, has crafted a system for disassembly, cleaning, shredding and melting of big plastics parts like car bumpers. These are formed into pellets with some additives making them as good, and cheaper, than virgin polypropylene from the petrochemical industry.It’s about time for the Indian auto industry to discard its ‘lack of maturity’ argument and accept emerging sustainability norms. It’s about time for the government to facilitate this process.