BIS quality standards needed for aluminium scrap imports into India

New Delhi

Experts have emphasized the urgent need for BIS standards for Aluminium Scrap to address quality, environment and safety concerns, as per global benchmarks and check the recycling, usage, and imports of sub-standard scrap.

This will help facilitate fair trade of scrap and will enable the availability of the right quality of scrap at the right price and ensure quality end products with zero harmful effects on the environment.

China's National Sword Policy and other measures to restrict scrap import has resulted in the diversion of entire global scrap chain towards India.

This is further fueled by the lack of sufficient tariff and non-tariff barriers to check the increasing scrap imports in India, majorly due to low import duties on scrap coupled with the absence of BIS quality standards for scrap recycling, usage and imports. As a result, India has overtaken China as the largest importer of aluminium scrap in the world.

This has not only adversely impacted the domestic industry but also leading to high consumption of unchecked, sub-standard scrap due to lack of any quality checks rendering a huge risk of inferior quality of end-products being used in critical applications across the nation.

The absence of any quality standards and import monitoring for scrap has rendered India a dumping ground for scrap from other countries. Despite the significant presence of primary Aluminium production capacity and potential to generate enough domestic scrap, India's consumption of scrap is almost 100% import dependent.

The primary Aluminium industry is facing a severe threat from the increasing import of Aluminium scrap, as its share in total imports increased from 52% in FY-16 to 63% in FY-20 resulting in Forex outgo- of $2 billion (Rs 14,000 Crore). This is posing a large threat to the survival of the capital intensive primary domestic Aluminium producing industry.

Experts say unfortunately, India does not have adequate institutional mechanisms to check proper collection, sorting, and processing of domestic or imported scrap.

Also, there are no benchmarks in place to check the quality of the final products produced from such scrap. Institution of proper standards for Aluminium scraps needs to be the first step to developing a nurturing ecosystem for the metal in the country. Post which, measures can be implemented to promote the circular economy and domestic recycling industry, and the utilization of indigenous scrap which will go a long way in reducing import dependency.

Countries with high Aluminium consumption like China and other countries of the European Union have laid down strict standards and guidelines for scrap imports and processing & pre-processing of scrap.

These countries have mandated stringent standards for Aluminium scrap as they follow ISRI (Institute of Scrap Recycling Industry) guidelines along with hazardous waste management practices.

For international trade, the Indian recyclers are also extensively using ISRI classification. Most scrap recyclers consider ISRI as the globally accepted classification because it provides global guidelines for classification of scrap into different types for commercial purpose only and facilitates the trade. However, ISRI is merely a classification and not a standard. If global countries would have felt the same, countries like the EU and China would not have developed separate quality standards for scrap recycling, usage, and imports.

Most of the Aluminium scrap finding its way into India is from the USA, which is diverting large volumes of scrap into our country, as China, EU and other developed countries have stringent standards. In FY20, India witnessed the highest ever scrap imports from the US, an increase of 327% over FY-16. The share of scrap imports from the US to India increased from 8% in FY16 to 24% in FY20.

Equally essential is the need to address the import duty differential between primary aluminium and scrap imports along with quantitative restrictions on import of scrap aluminium. The biggest beneficiary of a robust aluminium industry would be the economy and the government itself. Thus, the government should think progressively and look to institute the right checks to ensure the growth of the sector at large and therefore the economy. A good starting point for the same will be the announcement of a National Aluminium Policy focusing on putting in place a strategy for the optimum usage of scrap aluminium.

Experts say further, there should be complete clarity with regard to which applications can use the recycled aluminium products like auto components, utensils, etc., and the industries where only primary aluminium are to be used like electrical transmission/ distribution, aerospace, defence etc. Additionally, the right processing technologies along with the implementation of a stringent quality management system would help to determine the quality of the recycled metal which will result in increased consumer confidence in the quality of the product.