An Authorized Vehicle Scrapping Facility (AVSF) is a government-approved unit that dismantles End-of-Life Vehicles (ELVs) in a regulated and environmentally safe manner. These facilities are legally permitted to issue vehicle scrapping certificates, which vehicle owners require to deregister old vehicles and claim incentives.
From a business perspective, authorization is not optional. Any unit operating without approval is considered illegal, regardless of how long it has been in operation. Authorities now actively monitor unregistered scrapyards, making compliance a foundational requirement rather than a formality.
The Vehicle Scrappage Policy aims to phase out old, polluting vehicles and formalize the recycling ecosystem. This policy directly links vehicle deregistration and incentives to authorized scrapping facilities only.
| Vehicle Category | Scrappage Threshold |
|---|---|
| Private vehicles | After 20 years |
| Commercial vehicles | After 15 years |
| Government vehicles | After 15 years |
What this means for businesses:
The supply of scrap vehicles is increasing, but demand is shifting strictly toward authorized facilities. Insurance companies, OEMs, and fleet operators deal only with compliant units, making authorization a commercial necessity.
Not every scrap dealer is automatically eligible to become an AVSF. Authorities evaluate applicants based on land suitability, infrastructure readiness, and environmental safeguards.
Business insight:
Many applicants fail at the eligibility stage due to incorrect land zoning or incomplete documentation. Verifying land compliance before investment prevents costly redesigns later.
Setting up an AVSF requires approvals from multiple authorities, each with a specific role.
| Authority | Role in Approval |
|---|---|
| MoRTH | Central AVSF registration |
| State Pollution Control Board | Environmental consents |
| Local bodies | Trade, factory, or municipal licenses |
| Fire Department | Fire safety clearance |
Why this matters:
Approval timelines depend on how well these permissions are aligned. Parallel planning reduces delays and inspection objections.
Environmental clearance is the most critical and time-consuming part of the setup process.
| Approval | Business Impact |
|---|---|
| CTE | Allows investment and infrastructure setup |
| CTO | Determines operational start date |
| Hazardous waste authorization | Prevents shutdowns during inspections |
Interpretation:
SPCBs evaluate layout plans, pollution control systems, drainage, and waste storage methods. Weak documentation often leads to repeated queries and long approval cycles.
Facility design plays a direct role in approval success. Authorities expect segregation of activities to prevent contamination and environmental damage.
Operational relevance:
A poorly designed layout can result in conditional approvals or rejections, forcing expensive civil modifications after installation.
Authorities assess not only whether equipment exists, but whether it is suitable for safe and compliant operations.
Business takeaway:
Equipment selection should match the facility’s approved capacity. Overstating or understating capacity often raises inspection objections.
Once environmental approvals are secured, registration is completed through the designated MoRTH portal.
Why MoRTH approval is critical:
Only after MoRTH registration can a facility legally issue vehicle scrapping certificates. Without this, revenue operations cannot begin.
| Cost Head | Approximate Range |
|---|---|
| Land and civil works | ₹50 lakh – ₹2 crore |
| Machinery and equipment | ₹30 lakh – ₹1.5 crore |
| Compliance and approvals | ₹5 – ₹15 lakh |
| Pre-operational expenses | ₹10 – ₹25 lakh |
Interpretation:
Most cost overruns happen due to compliance corrections. Planning approvals early significantly reduces unnecessary capital expenditure.
Non-compliant scrapping operations face increasing enforcement actions.
Business reality:
Restarting operations after closure requires fresh approvals and inspections, often costing more than initial compliance would have.
Authorized facilities benefit from:
Compliance should be treated as a business enabler, not an administrative burden.
Green Permits assists businesses at every stage, including:
Our focus is not just approvals, but long-term operational readiness.
The vehicle scrapping industry is formalizing rapidly. Businesses that prioritize authorization gain a competitive advantage, while those who delay compliance face operational uncertainty.
Setting up an Authorized Vehicle Scrapping Facility the right way ensures stability, scalability, and long-term profitability.
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