How to start a vehicle scrapping business in India on a small scale?

Starting a vehicle scrapping business on a small scale in India requires careful planning. Besides, it also calls for adherence to regulations and a focus on responsible and environmentally friendly practices. There are a myriad of factors to consider before starting this vehicle scrapping business on a small scale. To begin with, let's first understand the scope of the scrap vehicle market in India. Then, we will analyze whether there is any need to start such a business.

So, the scope of the scrap vehicle market in India is huge. It holds economic and environmental implications. Lately, India has formulated a vehicle scrapping policy to encourage the discard of end-of-life vehicles (ELVs) responsibly. The policy also promotes recycling.

India has many ageing vehicles that are no longer roadworthy. Also, they aren't compliant with modern emission standards. This creates a substantial supply of potential scrap cars. Recycling automotive components and materials can provide a raw materials source. This can be used in the manufacturing industry. This, in return, helps potentially reduce costs and support growth in the automotive industry. Notably, the Indian government's efforts to introduce a formal vehicle scrapping policy can help the scrap vehicle market to grow. The policy offers incentives to vehicle owners who voluntarily scrap their old vehicles. It also has provisions for stricter regulations on allowing only roadworthy vehicles.

So, as you now know the scope, explore this step-by-step guide. This will help you kickstart your vehicle scrapping business on a small scale in India.

Research and Planning

First and foremost, study the vehicle scraping policies and regulations in your region or state and in India as a whole. Research the market demand and potential competitors. Develop a business plan. This must define your goals, target market, services offered and financial projections.

Legal and Regulatory Requirements

Register your AVSF with the specific authorities. Obtaining all mandatory licenses, NOCs or permits for operating a vehicle scrap business in India is mandatory. Thus, get your consent certificates from the respective Pollution Control Committee (PCC) or State Pollution Control Board (SPCB) before starting a facility. Understand all environmental and safety rules related to vehicle scrapping. Know about hazardous waste recycling and disposal.

Understand the rules set by the Ministry of Road Transport and Highways (MoRTH)

Get a general idea of the potential compliance with the MoRTH regulations. This helps a lot in starting a vehicle scrapping business on a small scale in India. Verifying the latest rules and requirements from official sources is crucial as they may have evolved since then.

Here are some potential compliances to consider when starting a vehicle scrapping business in India -

Location and Infrastructure

Find a suitable location for your vehicle scrapping operations. Consider factors like accessibility and space for dismantling, storage, and drainage. Set up basic infrastructure for dismantling, storing and safely disposing waste materials.

Equipment and Tools

Acquire essential tools and equipment such as wrenches, cutting tools, jacks, and safety gear for dismantling vehicles.

Safety Measures

Ensure implementation of safety protocols. Provide training to yourself and any employees. Train them regarding safe dismantling practices, handling hazardous materials and using protective equipment.

Environmental Compliance

Follow the rules for the environmentally sound management of hazardous waste. One must be aware of properly discarding materials like batteries, oil, airbags, and other hazardous components. Implement measures to prevent pollution and manage wastewater. Take steps to handle potentially toxic substances safely.

Dismantling Process

Develop a systematic dismantling process. The process must cover draining fluids, removing hazardous materials (like batteries), salvaging valuable components and separating recyclable materials.

Waste Management

Implement proper waste management practices. This ensures environmentally responsible disposal of hazardous materials and non-recyclables.

Recycling Partnerships

Establish relationships with local recycling facilities where you can sell salvaged materials like metal, plastics, and rubber.

ELVs Certification

Depending on the regulations, it may be required to certify that the vehicle has reached its end-of-life stage. This calls for its scrapping.

Marketing and Networking

Create an essential online presence through social media platforms or a simple website. Network with local mechanics, auto dealerships, and individuals looking to dispose of old vehicles.

Operations and Growth

Start small and gradually increase your capacity as you get experience and grow your customer base. Seek opportunities to expand your services by offering parts resale or collaborating with local repair shops.

Compliance and Documentation

Keep accurate records of vehicles received, parts salvaged, and materials sold or recycled. This documentation might be required for regulatory compliance and business analysis.

Financial Management

Create a budget for startup costs, including equipment, permits, and initial marketing. Plan your revenue streams, which come from scrapping fees, selling salvaged materials, or recycling revenues.

Education and Adaptation

Stay updated about changes in regulations and industry best practices. Be open to adapting your business processes accordingly.

Record Keeping

Maintain accurate records of the vehicles received, materials salvaged, and waste disposed of. This documentation may be required for regulatory compliance.

Start Small and Scale Gradually

Begin with a manageable number of vehicles and gradually scale up as your business gains experience, reputation, and customer trust.

Vehicle Scrappage Policy

Since the vehicle scrappage policy in India is effective, ensure that you comply with its requirements, like automobile age criteria, eligibility, and any incentives provided to vehicle owners. Moreover, the policy mandates the establishment of registered vehicle scrapping facilities (RVSFs) equipped with advanced technology for environmentally friendly recycling dismantling.

The policy is a proactive strategy designed to phase out more polluting, end-of-life vehicles (ELVs) from the roads. Under this policy, vehicles more than 15 years of age must be voluntarily scrapped. The vehicle scrappage policy is an eco-friendly practice. Therefore, it encourages owners to exchange their ageing vehicles for newer, greener models. The policy's core objective is to promote sustainable transportation practices. It also tends to align with international emission standards.

Continuous Learning

Stay aware of industry trends, technological advancements and regulatory changes. This is done to guarantee your business remains compliant and competitive.


India has many ageing vehicles. The automobiles are no longer roadworthy or compliant with modern emission standards. The Indian government's efforts to introduce a formal vehicle scrapping policy have accelerated the development of the scrap car market. But remember, even on a small scale, a vehicle scrapping business in India requires attention to legal, environmental, and safety considerations. Prioritize responsible practices and seek guidance from experts in waste management and recycling.

Diksha Khiatani

A writer by day and a reader at night. Emerging from an Engineering background, Diksha has completed her M. Tech in Computer Science field. Being passionate about writing, she started her career as a Writer. She finds it interesting and always grabs time to research and write about Environmental laws and compliances. With extensive knowledge on content writing, she has been delivering high-quality write-ups. Besides, you will often find her with a novel and a cuppa!

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