India : When to Expect the Metal Recycling Policy ?

The auto manufacturing industry in India is growing at a phenomenal pace and has registered a growth rate of 5.41 per cent y-o-y increasing from 24 million in FY16 to 25.3 million in FY17. The number of end of life vehicles have also simultaneous increased at a similar pace in the past few years raising serious environmental concerns.

At present a very small fraction of total ELVs are processed for scrap and mostly end up in local unregulated chop shops where they are sold part by part for reuse. As opposed to India, in developed economies with stringent metal recycling policies such as USA, the number of ELVs being scrapped are almost equal to the number of vehicles being manufactured annually, generating an estimated 22 billion worth of economic activity.

Experts unanimously acknowledge the urgent need for a recycling policy to be brought forth especially considering the benefits of developing the secondary steel sector. State owned MSTC and Mahindra Intertrade had entered into a joint venture to set up an automotive steel shredding and recycling plant. However, the ambitious 120 crore JV has been in doldrums since its announcement in August 2016 in the absence of a governing policy for the sector.

According to Alekh Tiwari an expert in the field of auto scrap recycling and Director at KPMG India “organized metal scrap recycling offers significant potential for energy and natural resource conservation besides being a valuable economic source for a nation. For instance USA, with a scrap recycling industry that generates ~USD 105 Billion in economic activity, is a net exporter of scrap, with high recycling rates of 80-90%. In contrast, India is a net importer of scrap and the overall recycling rate in India is less than 20%”.

According to Society of Indian Automobile Manufacturers (SIAMS) there are more than 30 million cars that were manufactured between 1990 and 2000 and can be considered to be in the end of life period. Tiwari believes that “A regulation in this space could see as many as 28 million vehicles going off the road and has the potential to generate about INR 320 billion worth of Scrap”.

President of the Metal Recycling Association of India (MRAI) Sanjay Mehta opines that key to the formulation and subsequent implementation of the scrap recycling policy is the participation of manufacturers. “The channel to draw ELVs to shredding plants would have to be under taken through a Private Public Partnership (PPP) model where manufacturers can facilitate the process through buy backs etc” Mehta asserted.

He also informed that MRAI has been in talks with NITI Ayog and suggesting measures to adopt industry best practices from around the globe. According to Mehta, It is being estimated that the policy may be completed by November-December; however the ground level implementation of the plans and policy would take at least 8 to 10 months.