India is in the final stages of shaping a revamped National Steel Scrap Recycling Policy, a move that is expected to play a decisive role in supporting the country’s ambitious steel capacity expansion while aligning the sector with global decarbonisation and circular economy trends.
According to industry and policy circles, the proposed framework will replace the existing 2019 scrap recycling guidelines and introduce a more comprehensive ecosystem covering scrap generation, collection, processing, taxation and end-use integration. The policy is likely to be aligned with broader industrial reforms expected around the FY27 budget cycle.
Why Steel Scrap Is Becoming Strategically Critical
India’s steel sector is undergoing a structural shift. With crude steel capacity targeted at 300 million tonnes (MT) by 2030 and 500 MT by 2047, the reliance on primary raw materials alone is increasingly seen as unsustainable.
Steel scrap is emerging as a critical alternative feedstock, particularly for:
- Electric Arc Furnace (EAF) and induction furnace routes
- Energy-efficient and low-carbon steelmaking
- Reducing dependence on imported coking coal
- Lowering overall carbon intensity of steel production
Government estimates indicate that domestic scrap availability could rise to around 35–36 MT annually over the medium term, driven by higher vehicle scrappage, infrastructure replacement cycles, and industrial asset turnover.
At present, India’s scrap usage rate remains significantly below global averages. International benchmarks show scrap contributes around 30–32% of total steelmaking inputs globally, while India’s share remains substantially lower, highlighting the untapped potential.
Key Focus Areas of the New Policy
The upcoming policy is expected to move beyond broad recycling intent and address structural inefficiencies across the scrap value chain.
1. Formalisation of the Scrap Market
A large part of India’s scrap trade remains unorganised, leading to:
- Supply inconsistencies
- Quality variability
- Limited traceability
The new framework aims to integrate informal collectors into a formal system through certification, digital tracking and organised processing hubs.
2. Tax and Compliance Reforms
Industry stakeholders, including the Indian Steel Association, have repeatedly highlighted taxation hurdles.
Key expectations include:
- Expansion of the GST reverse charge mechanism across the scrap value chain
- Reduction in tax leakages and compliance burdens
- Improved working capital efficiency for recyclers and steel producers
3. Infrastructure & Processing Capacity
The policy is expected to support:
- Modern shredding and scrap processing centres
- Scientific dismantling of end-of-life vehicles and equipment
- Improved segregation and contamination control
Viability gap funding and faster environmental approvals are being discussed to accelerate investment.
Linkage with Vehicle Scrappage and Circular Economy Goals
The steel scrap policy is also expected to be closely aligned with India’s vehicle scrappage programme. End-of-life vehicles are emerging as one of the most reliable sources of high-quality scrap, provided dismantling and recovery are done scientifically.
This integration supports India’s broader circular economy objectives, ensuring materials remain in productive use for longer cycles while reducing landfill and environmental stress.
Environmental and Decarbonisation Impact
From an emissions perspective, secondary steelmaking using scrap offers a clear advantage:
- Significantly lower CO₂ emissions compared with blast furnace routes
- Reduced energy consumption per tonne of steel
- Lower reliance on fossil fuel-intensive inputs
With India committed to achieving net-zero emissions by 2070, increasing scrap-based steel production is being viewed as one of the fastest and most scalable decarbonisation levers available to the sector.
Challenges That Still Need Resolution
Despite strong policy intent, several execution challenges remain:
- Bridging the gap between informal scrap aggregators and organised processors
- Building nationwide scrap logistics and storage infrastructure
- Ensuring quality standards for scrap supplied to large steelmakers
- Creating real-time data visibility across scrap generation and consumption
Successful implementation will require coordination across multiple ministries, including steel, transport, environment and urban development, under the leadership of the Government of India.
Outlook
Once finalised, the National Steel Scrap Recycling Policy is expected to become a cornerstone of India’s future steelmaking strategy. By improving raw material security, reducing emissions, and formalising a fragmented market, the policy could fundamentally reshape how steel is produced in the country.
For an industry preparing for unprecedented scale-up, scrap is no longer a secondary input — it is fast becoming a strategic asset.