Indian recyclers demand new rules to raise scrap use

Fresh regulatory changes and government mandates are required to raise the consumption of scrap metal in India, according to members of the Material Recycling Association of India (MRAI).

Demand for recycled materials must first increase to stimulate higher collection rates of scrap in India, Ekta Narain, director of business development at technology company Recykal, said in an MRAI webinar last week.

The Indian government should aid demand by mandating a minimum threshold of 25% recycled material to be used in finished products made in India supplied for government contracts, she suggested.

Indian metal scrap generation is still at very low levels, and rules for minimum recycled content in products would help to stimulate greater scrap volumes across the country, Dhawal Shah, director at recycler Metco Marketing and senior vice-president of the Bureau of International Recycling’s (BIR) non-ferrous metals division, said.

Shah pointed to the use of recycled brass in Indian ventilators designed to provide care to patients fighting Covid-19 this year as a recent success story for the use of recycled material in the country.

Essential sector
Sanjay Mehta, director of recycler MTC Group and MRAI president, said that the country’s scrap sector should be considered an essential industry.

The non-essential category afforded to the recycling sector resulted in scrap collection being badly affected during India’s Covid-19 lockdown this year, he said.

In contrast, India’s steel sector is considered “essential” and was able to continue production during the lockdown in March-April. This benefited large steelmakers like Jindal Steel & Power (JSPL), which focused on exporting large volumes of steel to China during India’s lockdown.

But many small and medium-sized steelmakers in India, which rely on steel scrap and direct-reduced iron (DRI), are still not operating at their typical levels yet, with the spread of the coronavirus and subsequent transport restrictions causing labor shortages and suffocating steel demand in the country.

Fastmarkets’ price assessment for steel scrap HMS 1&2 ((80:20)) import, cfr Nhava Sheva, India was $245-260 per tonne on July 17, down by $5 per tonne from $250-265 per tonne a month earlier.

National Recycling Policy

India imported 7.05 million tonnes of steel scrap in 2019, up by 11.4% year on year, according to the BIR.

Imports of United States-origin aluminium scrap to India totaled 245,954 tonnes in January-November 2019, up by 23.1% year on year, the US Commerce Department said.

But under India’s new flagship National Recycling Policy, Indian authorities are looking to reduce scrap imports and increase reliance on local resources by maximizing scrap collection.

Indian steel scrap supply amounted to 25 million tonnes in the country’s 2018-2019 fiscal year, according to its Ministry of Steel. The ministry expects supply to rise to 38-39 million tonnes by 2024-2025.

In 2024-2025, India hopes to import just 1 million tonnes of steel scrap.

The flagship recycling policy seeks to give far greater organization to India’s scrap collection sector, which until now lacks uniform standards in both collection and quality matters.

Though it has not yet been implemented, details of the policy were entered into the Indian government’s official gazette in November 2019.

The MRAI has requested an early implementation of the policy, but this has so far not happened.

The policy includes a framework to promote the establishment of a raft of recycling zones and clusters across the South Asian country to raise scrap collection sharply, Metco Marketing’s Shah said.

Under the policy, every major city will be encouraged to have a zone for the recycling of material, Amitabh Kant, chief executive officer of government policy think tank NITI Aaoyog said.

Greater organized scrappage of items such as vehicles - which are currently handled by the unorganized sector - will take place more easily under such plans, he said.

Import duty
Another matter discussed by recyclers during the webinar was the fate of the duty on scrap imported to India. The country currently has an import duty of 2.5% on ferrous scrap and tariffs of 2.5-5% on most non-ferrous scrap.

The Indian government has long discussed the removal of such tariffs, but progress has been slow on this front.

“Overseas companies are dumping finished products in India, but India is getting taxed on goods like scrap,” Shah said.

India levies no import tariffs on products from countries such as Japan, South Korea and Vietnam with whom India is partners in the South Asian Free Trade Agreement (SAFTA). This allows finished steel from these countries to arrive in India without incurring any tax.

To provide additional support to recyclers, duties on machinery technology imported to the country should also be waived for five years, Recykal’s Narain said.

There are around 20,000 enterprises involved in India’s recycling sector, directly and indirectly employing 250,000 people, according to the MRAI.

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