India’s Growing Low Carbon Aluminium Recycling Industry Demands Zero per cent Import Duty on Scrap Metal

Indian aluminium demand is growing rapidly due to increase in population, urbanisation and industrialisation. It is an important metal for high-value demand segments like infrastructure – Power, Transportation, Railways, Aerospace, Building & Construction, Renewable Energy and Consumer Durables to remain net zero economy by 2050.

India’s growing appetite for aluminium industry is largely accounted by demand for aluminium recycling industry in India which is zoomed at a CAGR of 9-11% from fiscal 2015 and 2023, while primary aluminium demand registered a CAGR of 1-2% only. India’s automobile, power, railways, packaging, consumer durables and construction sectors are the key demand drivers for recycling aluminium industry.

Looking to environment concerns, domestic primary aluminium manufacturers have the highest carbon intensity among global producers, with emissions of 14 tonnes of CO2 equivalent per tonne of aluminium. Whereas, recycled aluminium industry emits only 0.3MT CO2 per ton of recycled aluminium products.

India’s lower carbon-intensive aluminium recycled products demand is increasing day by day with newer applications with the growing appetite for environmentally friendly products due to its higher usage of scrap is another lever for decarbonisation. 

While recycling aluminium industry is facing major challenges of domestic scrap collection due to lowest per capital consumption in India in past. As Aluminium has a long life cycle, there is always a long gap between a recycled product entering into services and its end of life. Given, India’s fast paced growth, under the leadership of Prime Minister Modi Ji, India is consuming much more materials than is available from End-of-Life products. Hence, the recycling industry relies on imports of Metal Scrap to meet the shortfall to ensure sustainable business.

Mr. Sanjay Mehta, President, MRAI

“We strongly urge the Government must provide a level playing field for both primary and secondary sector as we believe both are vital contributors to the national economy, for example, if customs duties are applicable on import of scrap, then commensurate export duties on the basis of total cost to country on primary products should also be levied. Further, the Standards on Scrap material should be formed after consultation with recycling aluminum industry and to support recycling it should be industry friendly and not restrictive in nature, else it will have a negative impact on the aluminum recycling industry which is supporting to minimize the carbon emission,” as Mr. Sanjay Mehta, President, MRAI urged the government.

“Overall, we request government policy makers should make zero per cent duty on metal scrap till India becomes the Atmanirbhar on the availability of sufficient quantity and quality of scrap,” added by Mr. Mehta.

While highlighting the benefits of Secondary Aluminium Industry, Mr. Mohan Agarwal, MD, CMR Green Technologies Ltd., mentioned that, the usage of Recycled aluminium, due to its monumental benefits of being environment friendly, being high quality, generating large employment and being cheaper is growing a very faster pace. While recycling does not generate any liquid or solid effluents and has CO2 imprint of only 0.3 mt per ton, every 1 mt of primary aluminium generates 14 mt of Co2 emission and 8 mt of hazardous land fill. Therefore, as a services to the future generations, we must promote recycled aluminium over primary aluminium as added further by Agarwal.

Highlighting the role of recycling in the Indian Economy, Mr. Dhawal Shah, Partner, Metco Ventures LLP emphasized that, “India’s secondary aluminium metal manufacturing sector is playing a larger role in the circular economy, sustainability and low-carbon economy to minimise the CO2 emission. Despite this, Primary aluminium producers often suggesting to impose higher import duty on aluminium scrap and also demanding scrap unfriendly BIS specifications, insufficient collection systems which can hinder the market growth,” added further by Mr. Shah.

However, many countries like EU, UAE & South Africa have recognised that scrap is a critical raw material and have legislated to prevent its exports making it virtually impossible for us to import scrap. This is going to become more challenging ever after the execution of EU Waste Management Rule which will be effective from 1^st Jan 2025 for the non-OECD countries. 

More importantly, India needs to have strategy for enhancing scrap imports as the world is shutting exports and domestic sourcing is limited. Though, the present policy regime is highly skewed in favour of primary producers and every day new barriers to recycling aluminium business are being erected by the primary sector – such as aggressively advocating tariff and non-tariff barriers on secondary producers, introducing unreasonable and un-implementable standards for raw materials etc.