India scrap recycling sector awaits far-reaching policy actions

By  Paul Ploumis 25 Sep 2015  Last updated at  06:47:08 GMT

NEW DELHI (Scrap Monster): The metal recycling rates in India are much lesser when compared with the US and the Europe. This is partly due to the adamant government policies that seem to restrict further growth in the sector. Also, lack of awareness among industry participants also result in low recycling rates.

Incidentally, India’s metal recycling rate is just around 25%, considerably lower when matched with the US with 80%-90% recycling rates and Europe with rates above 70%. The country consumes nearly 21 million metric tons of scrap every year. Out of this almost one-third is imported, thus making India the third largest exporter of scrap in the entire world.

However, several factors seem to pull back the scrap trade in the country. Firstly, the recyclers in India need to pay 5% import duty on steel scrap. Despite repeated pleas by the Metal Recycling Association of India (MRAI), the country’s government has not yet announced any plan to scrap the 5% import duty.

According to recent study reports, India’s metal recycling industry has the potential to grow at 11.4% per year through 2020, if the import duty structure is abolished. The government also needs to take positive action to remove the hurdles in free trade with other nations.

India’s aluminum demand growth is projected at 11%, higher when compared with projected global growth rate of 6%. The high demand growth situation has led to surge in trade volumes of aluminum including scrap from China. A proposal to double the import duty on aluminum scrap from the existing 5% to 10% is under consideration of the Commerce Ministry.

The recycling sector in the country has the potential for immense growth, supported by proactive reform measures by the government. Granting of industry status and allowing Foreign Direct Investment (FDI) in the sector are other steps that may provide big boost to the country’s metal recycling sector.