EPR compliance: The new ESG test for Indian companies

When Swedish policymakers first floated the idea of Extended Producer Responsibility (EPR) in 1990, the world was beginning to grapple with the environmental cost of mass production and consumption. The principle was simple: producers should bear responsibility for the entire lifecycle of their products, including collection, recycling and safe disposal¹. But more than three decades later, EPR has evolved from an academic idea into a powerful global policy tool shaping sustainability regulations, corporate strategies and even cross-border trade.

Today, as countries like India intensify their climate commitments and shift toward a circular economy, EPR compliance has become a critical issue — both a regulatory obligation and a business opportunity.

From concept to global practice

The Organization for Economic Co-operation and Development (OECD) defines EPR² as a framework holding producers accountable beyond the point of sale. At its core, the policy aims to reduce waste, promote sustainable product design, and internalize environmental costs that were historically externalized to society.

The United Nations Environment Programme distills EPR into four guiding principles: the duty to prevent pollution, the lifecycle approach, the polluter-pays principle, and internalization of environmental costs³. 

Europe has been a torchbearer. EU’s Packaging Directive (94/62/EC)⁴, later amended in 2018, compels member states to adopt waste reduction strategies, promote reusable packaging and meet ambitious recycling targets. In the UK, a “shared producer responsibility” model is in place, where manufacturers, retailers and consumers collectively shoulder the cost of packaging recovery through the Packaging Recovery Note system.⁵

EPR’s Indian journey

India formally adopted EPR in 2011 under the E-Waste (Management & Handling) Rules, where producers of electrical and electronic equipment were made responsible for end-of-life management⁶. Over the past decade, the ambit has widened to include plastics, batteries, hazardous and construction and demolition waste and end-of-life vehicle scrap.

Key regulations now in force includes Plastic Waste Management Rules, 2016 (as amended), E-Waste (Management) Rules, 2022, Battery Waste Management Rules, 2022, Hazardous and Other Wastes Rules, 2016, Environment (Construction and Demolition) Waste Management Rules, 2025 and Environment Protection (End-of-Life Vehicles) Rules, 2025. These frameworks mandate producers to register with pollution control boards, set up take-back or collection systems, and ensure that collected waste is recycled by authorized entities.

Failure is not without consequences. Section 15 of the Environment Protection Act, 1986 prescribes imprisonment of up to five years or fines of up to INR1 lakh, with additional daily fines up to INR5,000 for continued contraventions. In addition, the Central and State Pollution Control Boards levy Environmental Compensation (EC), calculated through specific formulas⁷. 

The business impact

EPR compliance is not just a legal formality — it is reshaping how businesses operate. Producers must now budget for collection, transportation, recycling and reporting. Recent regulatory interventions, such as India’s minimum recycler fee for consumer electronics of INR22 per kilogram for electronic waste, have sparked pushback. In April 2025, several consumer electronics manufacturers challenged  the rule in the Delhi High Court, calling it an unfair financial burden⁸. They argued that this policy imposes excessive financial burden on manufacturers without delivering proportional environmental benefits, and they contended that the pricing should be determined by market forces rather than having fixed rates. 

Compliance requires investment in infrastructure, from setting up reverse logistics to partnering with authorized recyclers. It also nudges companies toward redesigning packaging and products to reduce costs associated with recycling. With consumers increasingly making environmentally conscious choices, companies that embrace EPR proactively can build stronger brands and enhance customer loyalty. What begins as a compliance challenge can transform into a competitive differentiator.

Implications for deals and ESG due diligence

EPR compliance is also altering the landscape of corporate transactions. In mergers, acquisitions and private equity deals, investors now scrutinize a company’s environmental obligations as closely as its financial statements. During ESG due diligence, buyers ask for: valid EPR registration certificates and authorizations; historical compliance with collection and recycling targets; pending fines, legal notices, or expired certifications and assumptions used to estimate liabilities for past non-compliance.

Failure to comply can depress valuations as potential acquirers factor in the cost of penalties, restoration and reputational damage. Conversely, a clean record of compliance can enhance investor confidence and align with growing ESG mandates globally.

Towards a circular economy

Beyond compliance, EPR holds transformative potential for India’s economy. By shifting responsibility onto producers, it pushes industries to innovate — designing more recyclable products, investing in green packaging, and developing business models around reverse logistics, repair and remanufacturing.

It also fosters job creation in the waste management and recycling sectors. As India’s urban centers struggle with mounting waste, formalizing the recycling ecosystem through EPR offers a pathway to both environmental and economic gains.

The road ahead

For businesses in India, EPR is no longer optional. Non-compliance risks legal penalties, financial setbacks, and reputational harm. However, forward-looking companies can turn EPR into an opportunity — by embedding sustainability into core strategy, strengthening ESG disclosures and leading in circular economy practices.

Ultimately, EPR is more than a regulatory requirement; it is a signal of how environmental responsibility is being redefined in the 21^st century. Producers are no longer judged only by what they make, but also by how they unmake it.

Sheetal Garg, Partner – Transaction & Corporate Finance, EY India, has authored this article.