Secondary metal producers seek duty cut on imported scrap in the ensuing Budget FY 2020-21

Secondary metal producers have asked the government to cut customs duty on imported metallic scrap and curb cheap imports, arguing they provide jobs but need a level-playing field.

The industry faces an inverse duty structure: It pays 2.5 per cent customs duty on imported metallic scrap of aluminium and copper; and 5 per cent on zinc and lead. However, finished products of these metals imported from countries that have free trade agreements with India enjoy zero duty. Imported raw materials thus are 2.5-5 per cent costlier than finished products, and processing them escalates costs to make Indian products uncompetitive in the world market.

“All over the world the usage of metal scrap is promoted as the environmental friendly material. While the government of India is levying basic custom duty on metal scraps in the range of 2.5 to 5 per cent which needs to be zero per cent to minimize the environment impact for the sustainable future. This would provide level playing field and settle down the issue of inverse duty stricture for the benefit of domestic secondary metal produces,” said Sanjay Mehta, President, Material Recycling Association of India (MRAI), as reported by Business Standard.

Mehta, in a pre-budget recommendation to the Union Finance Minister, said that metal recycling should be treated as a priority sector. The scrap processing offers biggest benefits of energy saving versus virgin material in the range of 74 per cent for iron and steel scrap, 95 per cent for aluminum scrap, 85 per cent for copper scrap, 76 per cent for zinc scrap and 65 per cent for lead scrap. Also, recycling of scrap has employed 8-10 million people across India directly and indirectly.

Shekhar Ghosh is a communications consultant and and former journalist, who has edited and written for publications such as like Business India, Business Standard, Business Today and Outlook.

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