Mahindra Intertrade Ltd, a part of the Mahindra Group, on Monday partnered with MSTC (a government enterprise) to set up India’s first greenfield auto-shredding and recycling capability.

The company hopes to set up various plants under this joint venture (JV), the first of which will be in Maharashtra or Gujarat. The plants will be fully automated and work would start from October in the first plant, which is expected to get equipment orders from the first quarter of the next year, and will run full capacity production by 2018, the company said.

The idea behind the JV is to meet India’s annual scrap requirement of 5-6 million tonnes, which at present is met through imports. The market is estimated to be in the range of $1.8 billion (around ₹12,000 crore). At present, scrap is being imported at around $200-300 a tonne, said the companies.

“Auto recycling (or scrappage), if implemented as per global standards, is not only environment-friendly, but also saves energy costs and minimises reliance on alternate resources,” said Sumit Issar, Managing Director, Mahindra Intertrade, said.

Every tonne of new steel manufactured from scrap steel saves substantial iron ore, coal, electricity and limestone, he said, adding that the initiative will also lead to forex savings.

“Steel-makers in India import more than five million tonnes of scrap a year for recycling into finished steel. The locally available scrap will help reduce their cost of production considerably, while hi-tech shredding will help the country significantly reduce pollution.”

This facility will establish an automotive recycling capability for end-of-life of vehicles (ELVs) for collection, compaction, transportation, de-pollution, dismantling, shredding, recycling, and disposal, Issar added.

“India’s demand for vehicles stood at 23.34 million in 2015. This JV has immense potential for further growth,” said BB Singh, Chairman and Managing Director, MSTC.

The capacity of the first plant will be 1-1.5 lakh tonnes depending on the product mix. It will begin commercial production by March 2018, Singh added.

The concept of vehicle scrapping is still new to India compared with the West. While the number of vehicles has increased substantially over the past two decades, there is no recycling or scrapping provision in place to deal with old and discarded vehicles.

Given the new, stricter norms on road-worthiness of automobiles and the recent National Green Tribunal guidelines on 15-year-old diesel vehicles, a huge number of vehicles are expected to come under the ELV category in India.

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