India’s New Scrap Metal Policy Likely to Deliver Twin Benefits

SEATTLE (Scrap Monster): The Indian government is planning to introduce a new policy to boost automobile and steel production in the country.

According to the proposed policy, all commercial vehicles must have to be scrapped after 20 years of use. To meet the growing demand, the government will set up new vehicle scrapping centres, where old vehicles will be scrapped. The scrapped metal will be used to make fresh steel. This will provide big boost to automobile and steel production in the country, sources said. Further, generation of huge quantities of scrapped steel will help the country to address raw material shortage in its journey to achieve 300 million tonnes of steel production by 2030-’31, in accordance with the National Steel Policy (NSP).

As per estimates, nearly 640,000 commercial vehicles will become due for scrapping within the first three years of implementation of the policy. The Ministry of Steel aims to set up as many as 20 new scrapping centres throughout the country, capable of shredding vehicles and other scrap. Government agency, in partnership with leading automaker Mahindra, has already announced setting up six such scrapping centres. Also, Tata Group has announced its plans to build automobile shredding unit in the city of Gurgaon-considered as a leading financial and technology hub.

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The policy recommends levying lower Goods and Services tax (GST) on replacement vehicles purchased under this scheme. The policy proposes lowering of GST slab rate to 10-12% from 28%. The recommendation will be put before the GST Council for approval.

The new scrap policy is likely to reduce over-dependence on imported scrap, by ensuring enhanced availability of domestic scrap to be used in steel making. Further, it will help to reduce consumption of iron ore and replacement of coking coal fired blast furnaces with electric arc furnaces (EAFs) that use scrap steel as feedstock.