India's auto industry says Extended Production Responsibility a good cause but needs more discussions

The government is also considering mandating a minimum use of 20 percent recycled material in the production of new vehicles. Sources say these discussions are at a very nascent stage and a technical committee will soon be formed. However, the environment ministry is leading the discussions and has kicked off consultations with the industry.

The industry has reacted with caution and experts CNBC-TV18 spoke to said that the mandates should not be too aggressive.

RC Bhargava, Chairman of Maruti Suzuki, said, "Its a good idea. The more we can recycle the better. But before making any policy we need a very detailed study by experts on how this can be done and in what form."

Speaking to CNBC-TV18 on the condition of anonymity, an automotive industry veteran said that mandating the use of a certain percentage of recycled material does happen in European countries and would be good for the industry.

"Using recycled material will cause some discomfort to the industry initially, but it will eventually be good for everyone. The mandates should not be too aggressive. However, it is difficult to imagine how automakers can be compelled to take off a certain percentage of vehicles from the roads. We will have to see if it is commercially viable for companies to buy old vehicles to recycle them, it may be better if companies and consumers can be incentivized in some way," he said.

Going forward there is a likely to be a debate on whether there should be mandates based on the polluter pays principle.

Former Road Transport Secretary Vijay Chibber said, "There is no need to reinvent the wheel and have mandates. The best way is to implement global best practices in vehicle recycling."