India Hints at Abolition of Import Duties on Ferrous Scrap

NEW DELHI (Scrap Monster): The Indian government has hinted at eliminating the import duties on ferrous scrap. The announcement to this effect was made by Aruna Sharma, Secretary of India’s Ministry of Steel at the Bureau of International Recycling (BIR) meeting held in New Delhi Saturday, October 14^th.

According to the official, the government is presently working on a scheme to bring down the duties on imported ferrous scrap to zero, in a bid to support domestic scrap-based steelmakers in the country. It is widely expected that the proposed cut will be announced in the 2018 financial budget. India currently has import duties ranging from 2.5%-5% depending on the type of scrap metal. It must be noted that the Metal Recycling Association of India (MRAI) had been demanding abolition of ferrous scrap import duty since long time.

The abolition of import duties on ferrous scrap is expected to lead to creation of level playing field. Currently, the duties levied in India makes it difficult for Indian importers to stay competitive in the global market. In addition to the duty, the complicated and expensive Pre-Shipment Inspection Certificate (PSIC) procedures too hurt importers badly. The MRAI has long been demanding granting of industry status to metals scrap sector which in turn will result in fresh investment in the sector and speedier approvals for project activities.

Incidentally, India imported nearly 6.9 million tonnes of ferrous scrap in FY16. The country’s recycling rate stands much lower at 20% -25% as compared with the recycling rate of above 80% by other countries such as Germany, Russia and Turkey. Further, the country is the third largest importer of metal scrap in the world. The imports are likely to remain robust as estimates suggest a deficit of around 10 million tonnes between domestic scrap generation and expected demand by 2020.

The most recent data published by the Indian Directorate General of Commerce Intelligence and Statistics (DGCI&S) under the Ministry of Commerce suggests that the cumulative ferrous scrap imports by India during the first half of 2017 totaled 2.682 million tons. The imports during this period registered sharp 28.9% decline over the corresponding period last year. India had imported 3.77 million tons of scrap during the initial half-yearly period in 2016. The ferrous scrap imports in June this year declined by 8.3% over the previous year to total 536,000 tons. The imports during the same month in 2016 had totaled 585,000 tons.