MSTC jumps 17% as Delhi-NCR scrappage scheme clears

Stocks in focus: MSTC and MMTC

Shares of scrap-focused miniratna public sector companies MSTC and MMTC rose sharply in Thursday’s morning trade, tracking expectations of higher organised vehicle scrappage activity.

On the NSE around 10:30 am, MSTC was up 14.72% at ₹512.15, while MMTC gained 6.97% to ₹69.72. In intraday trade, MSTC rose as much as 17% and touched ₹523.75, after opening at ₹449. MMTC also saw higher levels later in the session across exchanges, as sentiment around policy-led scrap supply and recycling activity strengthened.

What triggered the rally

The move followed the Union Cabinet’s approval of an incentive scheme to replace older trucks and buses operating in the Delhi-NCR region. The Cabinet was chaired by Prime Minister Narendra Modi.

The policy is aimed at phasing out BS-IV and older commercial vehicles and pushing owners to upgrade to BS-VI-compliant vehicles or electric vehicles (EVs). The scheme is positioned as an air quality intervention for one of India’s most polluted urban regions, with incentives designed to make replacement financially viable.

Investor interest increased as the market linked the scheme with a potential rise in organised scrappage volumes, scrap generation, and the broader recycling ecosystem.

Coverage: Delhi-NCR and neighbouring states

According to government estimates cited in the report, the scheme is expected to cover around 2.07 lakh vehicle owners across Delhi, Haryana, Rajasthan and Uttar Pradesh.

The breakup includes roughly 1.91 lakh truck owners and 16,329 bus owners. The target set is replacing over 2 lakh old trucks and buses, predominantly trucks, which are large contributors to vehicular emissions.

Eligibility and compliance rules for old vehicles

The scheme sets different pathways for different emission categories:

• Owners of BS-III and older vehicles will be required to scrap their vehicles at authorised Registered Vehicle Scrapping Facilities (RVSFs).
• BS-IV vehicles can either be scrapped or sold outside the NCR in non-NCAP cities and towns.

To avail benefits, eligible owners must purchase and register a replacement vehicle within the Delhi-NCR region. The replacement can be a BS-VI-compliant vehicle or an electric vehicle.

Incentives on offer: loan subsidy, fuel vouchers, EV benefits

The approved package includes multiple financial levers aimed at reducing the upfront and running cost burden during the transition period.

Key central incentives mentioned include:

• 5% interest subsidy (interest subvention) on vehicle loans for five years
• Monthly fuel vouchers of up to ₹4,800 (depending on vehicle category), provided for five years through oil marketing companies
• One-time incentives linked to EV purchases or certificate of deposit trading

In addition, automobile manufacturers are expected to provide an 8% discount on ex-showroom prices under the scheme.

State support: tax concessions and fee waivers

Participating state governments will also contribute through concessions and waivers. The report notes the following support:

• Waiver of registration fees for newly purchased vehicles
• Motor vehicle tax concessions, including up to 100% concession for new vehicles and 50% concession for used BS-VI vehicles
• These state-level incentives are noted as valid for a period of 10 years

The package also includes waiving pending liabilities on old vehicles, as cited in the report.

Scheme size and funding breakdown

The total outlay of the scheme stands at ₹9,585 crore.

It comprises:

• ₹5,041 crore in Central government support
• An estimated ₹1,601 crore in tax concessions to be provided by participating states

The scheme is described as a two-year incentive programme, while several benefits like the interest subsidy and fuel vouchers extend over a five-year period from registration of the new vehicle.

Key numbers at a glance

Market impact: why MSTC and MMTC drew attention

Market participants connected the policy to a possible increase in vehicle scrappage activity routed through registered facilities and organised recycling channels. That expectation placed scrap and metal-linked PSUs in focus.

MSTC is known for its role as an e-auction conduit for government assets, including scrap and obsolete materials. Higher scrappage volumes can translate into more auction activity and a larger pipeline of recyclable material entering formal channels.

MMTC, as a state-run trading company with exposure to metals, also drew interest as traders priced in the potential for higher scrap supply and recycling-linked demand. The day’s move in these names appeared closely tied to the policy announcement and near-term sentiment.

Analysis: what the policy is trying to change

The scheme targets a practical barrier in commercial fleet replacement: the combined cost of financing, running expenses, and taxes. By stacking loan subsidies, fuel vouchers, tax waivers, and manufacturer discounts, the programme attempts to lower the total cost of switching to BS-VI or EV alternatives.

It also creates compliance-based pressure through scrappage requirements for BS-III and older vehicles and a defined route for BS-IV vehicles. If implemented as described, the rules could push more vehicles into authorised scrapping and recycling facilities, improving traceability compared with informal dismantling.

Conclusion

MSTC and MMTC rallied after the Union Cabinet cleared a ₹9,585 crore Delhi-NCR vehicle replacement incentive scheme aimed at phasing out BS-IV and older trucks and buses. With an estimated 2.07 lakh owners covered and multiple financial incentives in place, investors are watching for how quickly the scrappage-linked activity translates into volumes through registered channels and organised recycling services.