Kolkata, Jan 24 (PTI) Goods and Services Tax, import duty and absence of other initiatives for a circular economy are hindering metal recycling, industry body officials said on Wednesday.

With more headwinds expected from scrap-exporting countries in near future, India needs to remove ambiguity to showcase its commitment to a circular economy, aiming at reducing emissions.

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"There is a wrong message going out to the world that India is not committed to the use of scrap by imposing a duty of 2.5 per cent. Europe, a major exporter of scrap, is now drawing rules and regulations that will make it difficult to import unless India takes proactive steps," Material Recycling Association of India (MRAI) senior VP Dhawal Shah said.

He made these remarks on the sidelines of the 11th International Material Recycling Conference.

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The European Union and many countries, including UAE, and South Africa, have recognised that scrap is a critical raw material and have legislated to prevent its exports, making it virtually impossible for India to import scrap, the trade body said.

This challenge will intensify after the execution of the EU Waste Management Rule, effective from January 1, 2025, for non-OECD countries, it said.

"Once new scrap export laws of the European Union will come into force, only OECD countries can import end-of-life materials. India is not part of the OECD bloc. The first step is to withdraw the import duty," Shah said.

The industry association also stated that another hurdle is the high GST of 18 per cent along with increasing operational capital costs.

The GST regime has also issues related to the input credit claim ecosystem.

"We have demanded for 5 per cent GST. The high tax rate is encouraging more imports rather than using domestic scrap," MRAI President Sanjay Mehta said.

Currently, the volume of domestic scrap is 25 million tonnes, and imports are 5 million tonnes, he said.

The association has also sought a carbon credit system and the expansion of the green finance scheme to secondary metal producers who are contributing to reduce emissions, Mehta said.

Meanwhile, Union Steel Minister Jyotiraditya Scindia, speaking at the event virtually, said that the government is well aware of the industry's demands, including GST with RCM (Reverse Charge Mechanism), tariff concessions, and carbon credits.

He stated that the ministry is playing the role of a facilitator to establish the ecosystem for scrapping.

"We will strive to ensure a conducive environment for growth of the industry," he said, showing government commitment to the sector.

MRAI comprises over 20,000 SME and large enterprises, employing over 25 lakh people directly and indirectly.

(The above story is verified and authored by Press Trust of India (PTI) staff. PTI, India’s premier news agency, employs more than 400 journalists and 500 stringers to cover almost every district and small town in India.. The views appearing in the above post do not reflect the opinions of LatestLY)