Call for Indian steel from scrap to be incentivised

Indian recyclers have called on their Government to remove the 2.5% import duty on steel scrap, calling it an uncompetitive burden on a domestic ferrous metal industry already under considerable pressure. They also argue it undermines ministers’ goal of a domestic steel capacity by 2030 of 300 million tonnes per annum (300 mtpa). 

Sanjay Mehta, president of the Material Recycling Association of India (MRAI) said that dropping the duty would be in line with the worldwide norm of zero custom duties. ‘The use of scrap in each tonne of steel saves 1.1 tonne of iron ore, 630 kg of coking coal and 55 kg of limestone besides resulting in a 40% saving in a energy and water consumption and 58% reduction of GHG emissions,’ he said while taking part in a webinar entitled ‘Vocal for local on steel scrap recycling processes’, organised by Metalogic PMS.

Towards 40% scrap-based

MRAI’s 1 200 members, representing 20 000 industries across India, say the duty is putting India’s 47 electric arc furnace (EAF) and 1 128 induction furnaces at a disadvantage because they largely depend on imported scrap.

It is estimated that 35-40% of India’s capacity target for 2030 will come from scrap-based steel. The share of EAF is already far higher in many other countries: 80% in Italy; 68% in the US and as much as 93% in parts of the Middle East.

ELV scrap policy

The webinar heard calls for a National Material Recycling Policy to boost domestic supply if scrap-based steel is to grow from its current 30 mtpa to 70 mtpa by 2030. Sumit Issar, managing director of Mahindra Accelo, said an important element would have to be the end-of life vehicle (ELV) policy requiring private vehicles older than 15 years, and commercial vehicles older than 10, to be scrapped. He said insurance companies must be told not to offer cover to these vehicles.

Additionally, panellists also urged the Steel Ministry to announce a separate package of support for secondary steel producer with turnovers of up to Rs. 750 crores. The current government leaves out many in a sector that has high turnovers relative to margins often as low as 1%.

Speakers also pushed for a gradual regulation of a largely informal sector and identified a need for India to adopt ISRI guidelines for ferrous scrap.