You are here: Home » Economy & Policy » News
Business Standard

How Trump's tariff hike will hit India's 10 mt of metal scrap imports

India imports about 10 mt of ferrous and non-ferrous metal scrap from across the world of which US contributes nearly 20%

Dilip Kumar Jha  |  Mumbai 

Steel, metal

The United States’ imposition of import tariff on primary metals including steel and aluminium is likely to hit India’s 10 million tonnes (mt) of metallic scrap import annually.

India imports about 10 mt of ferrous and non-ferrous metal scrap from across the world of which US contributes nearly 20 per cent. With the proposed increase in import duty on primary metals in the US, secondary metal producers in India fear that metal producers would use metallic scrap as raw material in order to prevent costlier import of finished into the country.

“More use of scrap as raw material for metal producers in the Unites States will result into its lower availability for importers across the world. This means scrap price would move up outside the United States which would impact secondary metal producers into India,” said Sanjay Mehta of Material Recycling Association of India.

Apart from the United States, Indian secondary metal producers import around eight mt of ferrous scrap from various parts of the world including European and African countries.

ALSO READ: Traders in export-focused sectors wary of Donald Trump's tariff threats

Apart from that, India imports around two million tonnes of non-ferrous metals scrap from all across the world.

Data compiled by the global consultancy KPMG showed, of India’s 3.48 million tonnes (2017) of aluminium production, primary and secondary (originating from scrap processing) producers contribute 70 per cent (2.86 million tonnes) and 30 per cent (1.23 million tonnes) respectively. Similarly, secondary metal from scrap contributes 20 per cent and 85 per cent of India’s total production of 0.96 million tonnes each of copper and lead. Secondary steel contributes nearly eight per cent of India’s 90 million tonnes of steel production

“Import duty levy in the United States would have a cascading effect on scrap suppliers across the world. They would jack up their price which manufacturers would ultimately pass on to consumers,” Zain Nathani, Director, Nathani Group of Companies, one of India’s leading scrap metal recyclers.


ALSO READ: European Union considers 25% tariffs on US steel, jeans imports

Meanwhile, the government of India is working on to bring all recycling industry – metal, glass, plastic, paper, e-waste on a common platform to create awareness on March 18 as the World Recycling Day as identified by the United Nations.

Echoing similar response, Dhawal Shah, Director of Metco Marketing, said, “We have written to the government to set up a recycling zone in India to bring all constituents of the metal scrap business in one location. This would not only bring down the cost of production significantly but also easy for overseas and domestic buyers to locate their suppliers of all materials resulting into hassle-free trade.”

Stepping ahead to strengthen the recycling industry in India, the central government is framing a recycling policy for the betterment of the entire value chain in the scrap processing business.

ALSO READ: Trade war: Trump faces last-ditch push by aides, allies to thwart tariffs

Metal recycling industry in India has already been struggling to cope up with working capital blockage with goods and services tax (GST) refund and inverted duty structure with 2.5 per cent on aluminium scrap and “nil” from ASEAN and FTA (free trade agreement) countries. Increase in scrap price is set to hit recycling business further.

“Increase in primary metal price has yielded similar increase in the prices of secondary metal. Further increase due to costlier scrap import would affect our business severely,” said Mehta.

First Published: Tue, March 06 2018. 23:52 IST
RECOMMENDED FOR YOU