Indian Scrap Recycling Industry Had Almost Reached a Standstill During Covid-19
...
Scrap recycling in India excluded from essential services increased the impact - Recycling as an activity, across major countries in the EU and North America has been classified as an essential service, with strong linkage to employment as well as concerns for environment and hygiene. However, sadly in India, the case was not the same and scrap recycling was not included under essential service, which impacted the industry to a further extent as scrap recycling came to a complete standstill due to the lock down, shared Mr Dhawal Shah, MRAI VP, in a recent interview to SteelMint.
Mr Shah added that last 2 months have been very disruptive for the industry with Domestic collections getting stopped in the latter half of March as lockdown had impacted all phases of the recycling activities. Even in the 2nd lockdown period from 15th April, when govt had given permissions to some recyclers outside the red zones to carry out their activities (by their respective collectorates) but that too did not result in any significant improvement as their activities depend on suppliers, buyers, workforce at plant, transportation services, courier services etc, many of whom could not obtain permission to operate at that time, leading to disruptions in supply chain.
Industry incurring losses, corrective action awaited - Imports of scrap too had got jammed at ports due to restrictions in movement of goods, causing huge cost pile ups. Understanding the pain of the industry, the Ministry of Shipping and the Ministry of Finance had issued notice asking for waiver of detention charges by shipping line and also waiver on demurrage charges, however most of the shipping lines have shown complete disregard for the order and are not followed the same. Consequently, the industry is incurring those losses and it is up to the government to take necessary action.
Restrictions on intermediate services caused imported scrap pile up at ports - An import transaction by a plant involves, Banks, shipping lines, ports, courier services, Transportation services etc. As courier services were stalled, original documents could not reach the banks/ports for material clearance, while restrictions on inter-state transportation kept mills in other states from sending trucks/trailers for collections. Cash Flow of buyers was restricted due to no sales, banks were not ready to lend extra in this critical time, added to which the detention and demurrage charges on the importers, all of which combined to cause severe difficulty in clearing import consignments at ports.
On longstanding demand to waive-off scrap import duty - India's domestic scrap collection, recovery as well as quality is quite low, thus at least till the govt is working to improve all these, import of scrap will remain necessary. MRAI believes that scrap import can co-exist with domestic production. Countries like the USA, EU, Far East Asia etc all have duty free scrap imports, and considering the numerous benefits of high usage of scrap in the manufacturing sector, India should also consider the same. The move to waive off the duty will directly benefit over 25,000 business units in India which are producing quality products for the country's core industries, and MRAI will continue to pitch the government for zero duty on scrap import.
To listen to the Interview, click here.
