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Mumbai
[India]
Posted on : Jan 14, 2020

“All over the world the usage of metal scrap is promoted as the environmental friendly material. While Government of India is levying basic custom duty on metal scraps in the range of 2.5 to 5 per cent which needs to be zero per cent to minimize the environment impact for the sustainable future.”


Mr. Sanjay Mehta, President, Material Recycling Association of India (MRAI)”.


India’s exponential demand for natural ore resources are increasing day by day staring at looming shortages of resource reserves in near future. Therefore, rethinking to save our natural resources is an immediate priority to prevent future shortages. Effectively, rapid urbanization, industrialization, increase in energy savings with decreased GHG levels and growth in infrastructure have strengthen the India’s metal recycling sector.


Therefore, Metal recycling is playing an important role to save our natural resources. A concept like circular economy, based on “Reduce-Reuse-Recycle” consumption philosophy can provide a sustainable alternative to this consumption pattern.


Looking at environmental perspective, we urge government of India to consider metal recycling as a priority sector which offers many benefits for sustainable future and certainly minimize the environmental impacts with the following benefits:



  • It offers biggest benefits of energy saving versus virgin material in the range of 74% for Iron and Steel scrap, 95% for Aluminum scrap, 85% for Copper scrap, 76% for Zinc Scrap and 65% for Lead Scrap etc.

  • Another benefit of recycling is employment which offers approximately 8-10 million people in India are directly or indirectly employed with the recycling industry. This sector has already become a key driver for tomorrow’s sustainable development.


This scrap metal industry is mainly fragmented into ferrous and non-ferrous scrap business. Ferrous scrap is a crucial raw material for the domestic secondary steel and stainless-steel sectors. Similarly, Non-ferrous scrap metal continues to play a major role as key raw material used for the manufacture of metallic goods used in Automobile, Foundries, Transport, Engineering, Construction, railway, packaging, household appliances, and consumer electronics and more than 10,000 MSME units.


Of the total India’s scrap consumption, 35% metal scrap is being generated by domestic collection and balance 65% of the scrap met through imported route but some of the aluminium scrap grades are almost 90% depending on the import source since such kind of scrap grades are not generated in India. It is largely because of the availability of good quality of scrap material, which is limited in India, due to lack of proper scrap collection.


As a result, Indian secondary metals sector relies heavily on imported metal scrap as a key raw material till we generate the enough scrap from the Domestic Market. Over the years, India has been a net importer of metal scrap largely due to non-generation of sufficient scrap in India and thus the import of the same must be promoted until such time.


The strong growth in scrap business suggests that we can expect the metal industry to increasingly replace the natural resources by scrap, thereby conserving raw materials, energy, and reducing CO2 emissions. It reduces greenhouse gas emission levels and minimize the environmental damage.


Despite of environmental and sustainable benefits, Indian metal scrap industry is facing stringent policy related issues like Import Duties, FTA (Foreign Trade Agreements). Hence, we expect government to support and create a conducive environment for metal recycling industry in India as highlighted by Mehta.


Therefore, Material Recycling Association of India (MRAI) requested the Government of India in its pre-budget wish-list for  2020-21 to consider the import duties on raw materials (metal scrap) to ZERO per cent which is required by the domestic secondary metal recycling industry to minimize the environmental impact and sustainable future.


 We would like to highlight the following points:



  1. The secondary metal activity spans across India, engaging with 20,000 MSMEs units

  2. This sector directly / indirectly employs around 25 lakh people, with about 30% work force are belongs to women force

  3. The secondary metal producers largely rely on imported scrap as it is basic raw-material due to non-availability of good quality local scrap and it doesn’t create any competition for the primary metal producers.

  4. World over, countries have allowed movement of metal scrap without putting any duty barriers (NIL Duty) as it is an essential commodity to minimize carbon emission and saving our natural resources.

  5. India is perhaps one of the exceptions, which has imposed an import duty ranging between 2.5 – 5% towards import Non-Ferrous scrap and 2.5 per on ferrous scrap.

  6. Metals Recycling and manufacturing through secondary route, is best suited for “Swachh Bharat” and “Make in India” programs.


We therefore strongly request for the basic customs duty on all grades of metal scrap should be brought to ZERO in order to promote the Metal Recycling Industry for the environmental and economic benefits.


MRAI expect Reduction of GST on Metal Scrap from 18% to 5%


With a view to enhance the GST revenue and increase the availability of domestic scrap for the recycling industry, we urge the Government of India to consider the reduction of GST on the following points :



  • We suggest to impose 5% GST for all types of metal scraps from existing 18% per cent in line with plastic, paper and e-waste scrap. This will improve compliance and bring more scrap into GST net from the first stage itself. In most countries across the world, GST/VAT is NIL on scrap since it is mainly generated from end of life vehicles/components/products.



  • GST on products manufactured from scrap recycling should continue to be taxed at the present relevant rates of GST. This will ensure increase of GST revenue to the government.


Below illustration shows there will be no changes in the Government Revenue if GST on Metal Scrap is reduced to 5%.










Calculation of Revenue to the Government when GST @ 18% on Metal Scrap.


















































Value of Scrap



10,000



GST on Scrap @ 18%



1,800



 



 



Value of Scrap



10,000



Value Addition



1,500



Sales Price



11,500



GST on Finished Product @ 18%



2,070



 



 



GST Payable by Industry



270



GST Credit Taken by Industry



1,800



Total GST Received by Government.



2,070




Calculation of Revenue to the Government when GST @ 5% on Metal Scrap


















































Value of Scrap



10,000



GST on Scrap @ 5%



500



 



 



Value of Scrap



10,000



Value Addition



1,500



Sales Price



11,500



GST on Finished Product @ 18%



2,070



 



 



GST Payable by Industry



1,570



GST Credit Taken by Industry



500



Total GST Received by Government.



2,070




Reference to the above table, Government will not lose a single rupee even, if GST rate is changed to 5%. Also, this will attract the un-organised players will come under the ambit of GST. Once they come under the tax net Government will get value addition at all the future transaction and this will be a booster step to increase Government revenue by GST.


Hence, MRAI has a vision is to make India a zero-waste country through establishment of ‘Circular Economy’ and Recycling Zones. MRAI has worked with Niti Aayog to draft the National Material Recycling Policy which is expected to:


1. Generate 50 lacs Jobs;


2. Create value addition of INR 12 lac crore;


3. Reduce GHG emissions by 23%;


4. Reduce dependence on non-renewable virgin materials by 20%.


Such a Policy would also create new start-ups with fresh investment into Recycling sector with parks, create employment for un-skilled workers and would also support for the success of our PM Shri Narendra Modiji dream project “Swatch Bharat” Abhiyaan, and introduce new technology for recycling under “Make in India.”


About MRAI :


MRAI is the apex National Association of India, representing the interest of the recycling industry with over 1200 members, including most Regional Trade/ Product Associations. Our collective strength comprises of over 20,000 Small, Medium and Large enterprises, directly and indirectly employing 25 lakh people. MRAI represents the various recyclable commodities like Metals (Ferrous &Non-Ferrous), Plastic, Paper, E-waste, Rubber, Glass, Automobile etc.


For any further details, please contact : Pramod Shinde, Head-Communication, MRAI (+91 99306297390)

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