The 5% import tax levied on steep scrap in India  two years ago, has had an incredibly adverse effect on the business. To add on to the ingredients that are now brewing up trouble for the metal recycling industry, India has signed FTA’s (Free Trade Agreements) with quite a few countries. Although there exists a policy by which semi-finished products can be imported duty free into the country, yet India is the only country, which has an import tax on steep scrap.

These heavy import duties, Special Addition Duty (SAD) and FTA’s have deeply affected the metal recycling industry and are threatening the profitability of recycling by the aforementioned industries. That being said, there is much talk by the Metal Recycling Association Of India (MRAI) to convince the government of removing the 5% import duty on steel scrap.

The MRAI has stressed on the importance of the metal recycling industry and has enunciated on the fact that the industry helps convert waste or scrap into wealth by recycling metals such as steel and zinc. It will pave the path for sustainable development in the country. This will not only have a positive effect on the environment but also lead to lesser waste of resources, in a day and age where everyone is trying to fight against the extinction of natural resources. The metal recycling industry is an important venture into the realm of sustainable development.

Not only this, due to the heavy import duty, Indian steelmakers are losing out on a substantial chunk of export business (approximately 11,000 crore INR) to competitors like Taiwan and China.

If the metal recyclers are to believed, Government intervention to remove the duty levied will ‘proportionately cut down the cost of secondary steel production which will in turn force primary producers to cut prices’, which have been raised considerably due to the said duty.

According to the scrap trade, if this intervention is not brought about any time sooner, the heavy import duty will lead to a further slack in demand which will end up resulting in the burden being passed on to the consumers, because of which the economy will have to bear a heavy consequence. Also several processes where metal scrap is used as a raw material for production of commodities which are of direct use to the consumers, will be hit severely.

Reducing (and in places, abolishing) the duty will result in the development of a level playing field between domestic steel manufacturers against the Chinese (who enjoy subsidies and state protection) and promotion of the utilization of capacities, which are currently lying idle with the domestic manufacturers.

India is the world’s third largest importer of scrap; even though its metal recycling industry has the potential to grow by a whopping 11.4% by the year 2020. But this will not be possible, if positive fiscal measures are not taken towards the removal of import duty and several free trade hurdles. The government, it is argued, has to now realize the importance of recycling and the importance of giving the concerned industry the independence of doing what it considers right. India’s recycling is less than 20% in an age where recycling all over the globe is regarded as one of the most important steps towards sustainable development for the future. If the government does not remove the import duty, it can be said without a shade of doubt, that the steel industry is in for big trouble!