How to start a vehicle scrapping business in India?

Starting a vehicle scrapping business in India involves several steps and considerations. It is because of the regulatory and environmental aspects associated with the automotive industry. Lately, India formulated a vehicle scrapping policy to encourage the responsible disposal of old automobiles. One must be sure to acknowledge the latest regulations and requirements with local authorities before proceeding.

But before you proceed with starting a vehicle scrapping business in India, you must abreast yourself with some facts that may intrigue you -

The scope of the scrap car market in India is huge. It holds economic and environmental implications. Lately, India prepared a vehicle scrapping policy to encourage the responsible disposal of end-of-life vehicles (ELVs). The policy also tends to promote recycling.

India has many ageing vehicles that are no longer roadworthy or compliant with modern emission standards. This creates a substantial supply of potential scrap cars. Recycling automotive components and materials can provide raw materials source. These can be useful in the manufacturing industry, potentially reducing costs and supporting growth in the automotive industry. The Indian government's efforts to introduce a formal vehicle scrapping policy can accelerate the development of the scrap automobile market. The policy may include incentives for vehicle owners to scrap their old automobiles voluntarily. Also, the policy may introduce stricter regulations on allowing only roadworthy vehicles.

Here's a general guide to help you get started with establishing a registered vehicle scrapping facility (RVSF) in India:

Research and Planning:

Study the vehicle scrapping policies and regulations in your state or region. Check with local government agencies, such as MoRTH (the Ministry of Road Transport and Highways). This will help you to understand the legal requirements and environmental standards for vehicle scrapping businesses. Research the market demand and potential competitors in your area. Understand the types of vehicles that are commonly scrapped and recycled.

A general idea of the potential compliance with the MoRTH regulations for starting a vehicle scrapping business helps a lot. 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:

Registration and Licensing:

Register your vehicle scrapping facility with the Registrar of Companies (RoC) and other relevant authorities. Or else, you must reach out to relevant state government departments. Obtain any necessary permits and licenses for running a vehicle scrapping business in India. These could include environmental clearances, waste management authorizations and more.

Environmental Compliance

Follow the rules for the environmentally sound management of hazardous waste. This includes adhering to norms for discarding items such as batteries, oil, airbags, and other hazardous components properly. Implement measures to prevent pollution, manage wastewater, and safely handle potentially toxic substances.

Facility Requirements

Establish scrapping facilities that adhere to safety and environmental standards. This may include spill containment measures and proper drainage systems. It also includes having safe storage areas for hazardous materials.

Health and Safety Standards

Implement safety protocols. Also, train employees properly to ensure practising safe dismantling process, using personal protective equipment (PPE) and emergency response measures.

Dismantling Process

Follow guidelines for proper vehicle dismantling in India, including removing components and materials, draining fluids, and disassembling hazardous parts.

Documentation and Reporting

Maintain correct records of the vehicles received, parts salvaged, materials recycled, and discarded hazardous waste. These records must be submitted to regulatory authorities as and when required.

Disposal of Non-Recyclables

Frame process for adequately discarding non-recyclable materials that can’t be reused.

ELVs Certification

Depending on the regulations, there might be requirements for certifying that the vehicle has reached its end-of-life stage. This marks them eligible for scrapping.

Reporting and Compliance Audits

Be prepared for potential audits by regulatory authorities. This is done to assess your compliance with environmental and safety regulations.

Adherence to Vehicle Scrappage Policy in India

Since the vehicle scrappage policy in India is in place, ensure that you comply with its requirements. Certain requirements are age criteria for eligible vehicles and any incentives provided to vehicle owners.

It's important to consult with legal experts, environmental consultants like EcoserveIndia, and relevant government authorities. This ensures your vehicle scrapping business in India meets all the necessary compliances.

The particular requirements may vary depending on your location and the latest developments in regulations.

Business Plan

Come up with a detailed business plan. The plan must define your business goals, target market, financial projections and operational strategies. Include details about the types of vehicles you'll work with. Mention the estimated volume of vehicles you plan to handle and your revenue model (e.g., fees for scrapping services and selling recyclable materials).

Location and Infrastructure

Find a suitable location for your vehicle scrapping business yard that complies with local zoning and environmental regulations. The yard must be large enough to accommodate vehicles, equipment, and recycling facilities. Set up the necessary infrastructure, including dismantling areas, storage facilities, drainage systems and safety measures.

Legal and Regulatory Compliance

Register your vehicle scrapping business in India with the appropriate local authorities. Comply with environmental rules related to hazardous waste recycling, disposal and pollution control. This includes obtaining the SPCB NOC .

Equipment and Facilities

Get the necessary equipment for vehicle dismantling. The list may include hydraulic shears, car crushers and material-handling machinery. Ensure proper facilities for draining fluids, removing hazardous materials and segregating recyclable components.

Safety Measures

Safety is of prime importance in a vehicle scrapping business. Provide training to your employees on safe dismantling practices. Make them learn the use of protective equipment. Implement safety protocols for potentially hazardous materials, such as batteries, fluids, and airbags.

Environmental Concerns

Develop a proper waste management and disposal system. This is done to handle hazardous waste generated during scrapping. Establish partnerships with authorized recycling facilities for proper disposal of waste materials.

Marketing and Networking

Contact local mechanics, auto dealerships and individuals looking to dispose of old vehicles. Promote your services via digital channels, local advertisements and word-of-mouth referrals.

Financial Management

Estimate your initial investment, operating costs and potential revenue. Consider equipment costs, labour, facility expenses and regulatory compliance. Also, secure funding through personal savings, loans, or investors.

Stay Updated

Keep yourself informed about any changes in regulations, technology, or industry best practices related to vehicle scrapping in India.


Remember that starting a vehicle scrapping business in India requires careful consideration of legal, environmental, and safety aspects. Consult with legal experts, environmental consultants like Ecoserve India and industry professionals to ensure that your business operates ethically and within the boundaries of the law.

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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