India’s Scrap Policy and Domestic Collection Growth: Market Trends, Economics, and Actionable Insights

Introduction: Why India’s Scrap Policy Matters Now More Than Ever

The global metals industry stands at a crossroads. Heightened climate action, resource scarcity, and soaring commodity prices are driving nations to rethink the very foundations of raw material sourcing and consumption. As supply chains confront major volatility and sustainability moves from a buzzword to a boardroom priority, India’s scrap policy has rapidly transitioned from a regulatory footnote to a central pillar of metals sector transformation.

India’s government, recognizing both the urgency of sustainable resource utilization and the competitive imperative of reliable supply chains, has introduced a comprehensive scrap policy framework. This aims to catalyze a shift toward circularity, unlock domestic scrap collection potential, and reshape the economics of steel and aluminum production—a crucial step, given India’s ambition to become a global manufacturing powerhouse.

Yet, real change hinges on how stakeholders interpret, implement, and capitalize on these shifts. Whether you are a scrap trader, steel manufacturer, recycling entrepreneur, or investor, understanding the drivers, opportunities, and risks in this evolving market is the only way to capture emerging value and sidestep pitfalls.

This in-depth guide explores the core aspects of India’s scrap policy, analyzes evolving market and economic trends, and delivers clear recommendations tailored for metals sector players. By rooting strategy in actionable insights and foresight, you’ll be better positioned to lead as the Indian scrap industry enters its most dynamic decade yet.

Section 1: India’s Scrap Policy—Setting the Stage for a Circular Economy

1.1 A Brief Overview of the Scrap Policy

In 2021, India’s Ministry of Road Transport and Highways (MoRTH) rolled out the Vehicle Scrappage Policy, while the Ministry of Steel articulated a broader National Scrap Policy. Together, these initiatives signaled a strategic shift in India’s approach to metal waste and closed-loop resource management. The two pillars of the policy ecosystem are:

- Encouraging domestic scrap collection: By mandating structured end-of-life vehicle scrapping processes and incentivizing recycling, the government seeks to curb reliance on imported ferrous and non-ferrous scrap. According to the Joint Plant Committee, India’s ferrous scrap imports in 2020 hovered around 6.86 million tonnes, underscoring the scale of the opportunity for import substitution. - Formalizing and modernizing the scrap industry: For decades, India’s scrap market has been highly unorganized, with over 70% of the sector operating informally based on estimates by the Bureau of Indian Standards. The new policy framework establishes standards for processing, traceability, environmental controls, and worker safety, laying the groundwork for a robust, transparent ecosystem.

Beyond direct industry impact, these moves align with India’s global climate commitments under the Paris Agreement, aiming to cut 1 billion tonnes of projected carbon emissions by 2030. By promoting resource efficiency, reducing landfill, and enabling circularity, the scrap policy helps anchor India’s broader green transition—establishing the recycling industry as a green growth engine for jobs and GDP.

1.2 The Rationale Behind the Policy

Multiple forces have converged to make scrap management mission-critical for India’s metals sector:

- Rising vehicle and infrastructure lifecycles: As the world’s third-largest automobile market and home to rapid urban development, India generates an estimated 22 million end-of-life vehicles (ELVs) annually. Without a formal system for collection and recycling, much of this valuable scrap either leaks abroad or is processed inefficiently. - Raw material vulnerability: Fluctuating scrap import prices, especially during global shocks like the Russia-Ukraine conflict, have exposed the fragility of India’s metal supply chain. The World Steel Association highlights how input cost swings undermine profitability and production planning for hundreds of Indian foundries and mills. - ‘Make in India’ productivity push: To meet ambitious targets for local manufacturing and infrastructure growth, cost-effective and sustainable inputs are paramount. Scrap-based electric arc furnace (EAF) steel production, already over 30% of India’s total steel output, is widely recognized for lower emissions and energy intensity compared to blast furnaces using virgin iron ore. - Informal sector drawbacks: Unregulated scrap collection leads to unsafe working conditions, environmental contamination, loss of material value, and under-taxation—hamstringing both public revenue and sector credibility. - Global case studies: Countries that have formalized scrap (such as Turkey, one of the world’s largest scrap importers and recyclers) have seen both industrial cost reduction and environmental gains. The U.S. steel industry, for instance, sources more than 70% of its raw material from recycled scrap, resulting in a 60% energy savings and substantially lower emissions.

India’s scrap policy thus operates at the intersection of economics, environment, and national competitiveness—transforming metal waste from a management headache into a strategic resource.

Section 2: Market Drivers Reshaping India’s Scrap Flows

2.1 Domestic Demand on the Rise

India’s unmet hunger for metals fuels the next wave of scrap industry growth. The Indian Steel Association projects that domestic steel consumption will leap from 120 million tonnes in FY22 to over 200 million tonnes by 2030, reflecting the world’s fastest demand growth after China. Several demand drivers underscore this trajectory:

- Urbanization and Infrastructure Boom: With over 40% of the population expected to reside in urban areas by 2030 (up from 31% in 2011), demand for steel in transport, housing, bridges, and tunnels is surging. Mega-projects such as the Mumbai-Ahmedabad bullet train and Smart City Mission are forecast to collectively consume over 10 million tonnes of steel in the next five years alone. - Automotive Fleet Renewal: The average age of vehicles on Indian roads is rising, with over 21 million vehicles more than 15 years old, according to MoRTH data. Implementation of mandatory fitness checks and vehicle de-registration under the scrappage policy is expected to unlock over 8-9 million tonnes of ferrous scrap annually. - Manufacturing, Appliances, and Real Estate: Demand for lower-cost recycled inputs is increasing among manufacturers of white goods, electricals, and construction rebar. Secondary metals sourced from scrap offer both price competitiveness and ESG credentials.

Fact: According to Frost & Sullivan, the Indian market for steel scrap is projected to exceed $7 billion by 2026, more than doubling from 2021 values.

2.2 Import Volatility and Supply Chain Shifts

India’s heavy dependency on imported metal scrap (historically 12-15 million tonnes annually for steel alone) exposes the industry to unpredictable cost increases, logistics delays, and geopolitical uncertainties.

- Case Study: In 2022, global ferrous scrap prices soared over 70% due to war-driven disruptions and trade restrictions. Indian steelmakers saw input costs skyrocket, eroding margins and disrupting steady plant operations. - Strategic Response: By ramping up organized domestic collection and processing, Indian companies can buffer themselves against global supply chain shocks. Localizing scrap streams also ensures manufacturers can uphold ‘Make in India’ mandates and avoid costly import bottlenecks.

2.3 Regulatory Incentives

The National Scrap Policy is underpinned by an unprecedented suite of regulatory carrots, designed to break inertia and accelerate behavioral change across the metals value chain:

- Deregistration bonuses, fee waivers, and GST credits for compliant vehicle scrapping. - Central government co-funding and technical assistance for scrapping centers, including modern equipment grants and technology adoption. - Procurement mandates: Public infrastructure projects are now required to preference materials with a defined recycled content minimum, creating guaranteed demand for scrap-based inputs. - Accelerator effects: Regulatory certainty and procurement incentives are spurring private sector investments into automated dismantling, material recovery facilities (MRFs), and digital marketplaces. Notably, Tata Steel and Mahindra MSTC have set up advanced recycling plants to process end-of-life vehicles, raising the bar for industry best practices.

Given these tailwinds, industry analysts from CRISIL estimate that formal scrap processing capacity could reach up to 30 million tonnes by 2030, provided policy momentum continues.

Section 3: Scenario Analysis – Where India’s Scrap Story Is Heading

India’s scrap policy now sits inside a much bigger industrial shift. Steel capacity is marching toward 300 million tonnes by 2030 to 2031, up from about 200 million tonnes today. Crude steel output in FY 2024–25 already reached roughly 151 million tonnes, compared with about 144 million tonnes the year before, and policymakers are comfortable talking about sustained capacity expansion on that path. steel.gov.in+2Press Information Bureau+2

Alongside this expansion, steel demand is expected to reach around 192 million tonnes by 2030, growing at roughly 6 percent per year. Construction and infrastructure alone are likely to represent more than 60 percent of that demand. Per capita consumption is about 98 kilograms today and is projected to climb toward 160 kilograms by 2030. BigMint+1 When you put these numbers together, the conclusion is straightforward. India will need far more metallic input every year, and it cannot rely only on ore and coking coal if it wants cost control and climate credibility.

The ferrous scrap side is already reacting. Between 2021 and 2024, ferrous scrap usage in India rose more than 43 percent, from about 24 million tonnes to over 34 million tonnes. Domestic scrap generation reached around 32.4 million tonnes in FY25 and could approach 46.7 million tonnes by FY30 if current growth holds. Metalbook At the same time, imports remain significant. In 2023, India imported about 11.76 million tonnes of ferrous scrap, up more than 40 percent year on year. S&P Global Customs data show that in January to April 2025, imports reached about 3.48 million tonnes, nearly 8 percent higher than the same period a year earlier, and H1 FY26 imports are reported around 4.22 million tonnes, roughly 4 percent up on the prior year. Fastmarkets+1

This puts India into three broad scenarios.

In the first scenario, domestic collection grows, but not fast enough. Steel capacity keeps expanding. Coking coal imports climb from about 87 million tonnes in FY25 toward 135 million tonnes by 2030, as recent assessments suggest, and the blast furnace route remains heavy. ey.com+1 Scrap fills part of the gap, yet the country still depends on large import volumes from the EU, the Gulf, and North America. India already took about 1.37 million tonnes of ferrous scrap from the EU alone in one recent year, more than double the prior year. ING Think Under this path, volatility in global scrap prices and freight continues to transmit straight into Indian cost curves. The national scrap policy reduces some risk, but the supply gap remains wide.

In the second scenario, policy aims are met or exceeded. Vehicle scrappage ramps up, construction and appliance replacement cycles start to deliver more organized scrap, and formal recycling capacity climbs toward the 30 million tonne mark by 2030 as some analysts forecast. Metalbook The vehicle fleet alone can support this. Internal assessments of end of life vehicle volumes point to more than 10 million ELVs across the country, with annual flows rising quickly as stricter fitness norms take hold. transport.wb.gov.in+2teriin.org+2 If even a part of this volume reaches registered scrapping centers, and if industrial offcuts and demolition scrap are captured more effectively, domestic generation can cover most of incremental scrap demand. Imports then become a balancing item rather than a structural crutch.

In the third scenario, India pushes harder on scrap because of external constraints. Global pressure on coal and emissions grows. Border adjustment measures in export markets reward lower carbon steel. Domestic coal logistics remain tight, as rail congestion and mine development lag demand, something officials already highlight as a bottleneck. Reuters+1 In this environment, electric arc furnaces and scrap based metallics offer a strategic hedge against coking coal exposure. The scrap policy becomes less of an environmental tool and more of a national security and competitiveness instrument.

Reality will likely combine parts of all three. Steel capacity is moving toward 300 million tonnes whatever happens. Domestic scrap generation is rising fast, but the informal sector still handles a large share. Imports are not going away. The key question is the mix. Will India bridge the metallic gap with more ore and coal, or with more efficient and transparent scrap collection. The answer determines cost, risk, and emissions for decades.

Section 4: Economic Trends and Strategic Implications

The economics of scrap in India are shifting on three axes. Price parity with ore and coal, logistics and location, and capital allocation.

On price parity, the numbers already tell a clear story. Global benchmarks have shown repeated periods where delivered ferrous scrap is more competitive than iron ore plus coking coal on a marginal cost basis, especially when carbon and energy are priced explicitly or implicitly. War driven spikes in 2022 took international ferrous scrap prices up by more than 70 percent from prior levels, which hurt scrap buyers in the short term, but also exposed how vulnerable integrated routes can be when all raw material categories spike together. S&P Global+1 The lesson is that a broader menu of metallic inputs gives mills more options when any one route becomes too expensive.

On logistics, scrap behaves differently from ore and coal. Ore and coal usually flow in large, standardized parcels into port based integrated complexes. Scrap is more fragmented. End of life vehicles, demolition material, industrial offcuts, and ship recycling residues tend to sit closer to consumption centers and transport corridors. This is why the geography of registered scrapping facilities matters. Tata Motors, for example, has created a network of Re.Wi.Re plants, with facilities in Pune, Jaipur, Bhubaneswar, Surat, Chandigarh, Delhi NCR, Kalyani, and the Northeast. These eight sites now have capacity to dismantle more than 130,000 vehicles per year, with individual centers handling between 15,000 and 21,000 ELVs annually. The Times of India+4tatamotors.com+4Autocar Pro+4 This network does not just create steel scrap. It reduces transport distances from scrapyard to furnace, improves material quality through better depollution and sorting, and anchors local employment.

On capital allocation, the question for both private and public stakeholders is where each rupee delivers the most strategic value. India has already signalled strong commitment to blast furnace and coking coal investments through capacity plans and coal sector reforms. Reuters+3ey.com+3India Brand Equity Foundation+3 At the same time, companies like Tata Steel are putting real money into scrap platforms. The steel recycler at Rohtak in Haryana has a capacity of about 0.5 million tonnes per year and uses shredding and sorting technologies adapted from global best practice. tata.com Some peers are planning similar facilities or joint ventures to build shredding and aggregation hubs. These projects are smaller in ticket size than greenfield integrated plants, but they deliver direct feed into existing EAFs and induction furnaces and upgrade the entire collection chain.

Macroeconomic trends reinforce the case. India has been a net importer of finished steel in recent years, with imports hitting a nine year high of around 9.5 million tonnes in 2024 to 2025. Press Information Bureau+1 As domestic demand and capacity both rise, the country wants to avoid a scenario where local mills are squeezed between high raw material costs and cheap finished imports. Expanded scrap collection and recycling can lower marginal production costs and help Indian producers compete better on both price and sustainability, at home and abroad.

Section 5: Actionable Strategies and Case Studies

For Indian steelmakers, the scrap policy should be treated as a production strategy tool, not a compliance issue. One clear strategy is to map the full metallic balance sheet plant by plant. This means quantifying how much scrap each unit can handle at different quality mixes, how local ELV and demolition flows can support those levels, and what gaps will still need imported scrap or ore. Many plants run with rough rules of thumb on scrap share. The new environment rewards precise understanding of how scrap content affects yield, power consumption, electrode use, and product properties for each mill.

A second strategy is to build or align with regional collection clusters. The Tata Motors Re.Wi.Re network shows what a coordinated approach can look like. With facilities spread across several states, each authorized under the national rules and integrated into OEM and dealer channels, the company can guarantee a steady pipeline of ELVs with known provenance and condition. The Times of India+4tatamotors.com+4Recycling Today+4 This helps steelmakers that partner with such networks, because material arrives in predictable compositions, with fluids removed and hazardous parts handled safely. Mills further away from these clusters can work with municipalities, transport undertakings, and scrap entrepreneurs to create similar hubs near their own plants.

Third, steelmakers can use pricing and contract terms to pull scrap out of the informal stream into the formal system. The scrappage policy already offers incentives to vehicle owners, including motor vehicle tax concessions of up to 25 percent for non transport vehicles and up to 15 percent for commercial vehicles purchased against scrappage certificates. Press Information Bureau Mills can complement this by offering slightly higher prices or better payment terms to suppliers that meet documentation and environmental standards. Over time, this narrows the spread between compliant and non compliant yards and shifts collection into channels that support traceability and ESG targets.

For traders and processors, the opportunity sits in aggregation and quality upgrading. Indian domestic scrap generation is already above 30 million tonnes per year and is headed into the mid 40s by the end of the decade. Metalbook Yet a large share is still collected in small lots with limited sorting. Traders that invest in mechanical shredding, sensor based sorting, and digital tracking systems can produce feedstock that meets specific grade and residual specs for high grade long and flat products. This creates a premium segment within the domestic scrap market, similar to what has evolved in mature markets, and creates differentiation beyond simple volume.

For policymakers, the priority is consistency and enforcement. The basic policy architecture is in place. The Motor Vehicles scrapping rules define how registered scrapping facilities should operate. The national scrap policy describes the objectives on circularity and import replacement. teriin.org+2Press Information Bureau+2 The next step is steady enforcement against non compliant yards, backed by practical support to help informal operators transition. Timely approvals, clear state level procedures for RVSFs, and integrated digital systems for certificates and benefits can keep investment flowing and avoid policy fatigue.

Several case studies illustrate what success can look like.

Tata Steel’s recycling plant in Rohtak shows that large scale, centralized scrap processing is viable in India. With a capacity of 0.5 million tonnes per year, the facility sources material from an extensive catchment, including ELVs, industrial scrap, and obsolete goods. It applies shredding and sorting technologies that the company studied in overseas plants, adapted to Indian scrap profiles. This plant helps feed Tata’s EAF and induction units with consistent quality material and reduces contamination that would otherwise reduce yields or affect product quality. tata.com

The Re.Wi.Re network represents a different model. Rather than focusing on a single large plant, Tata Motors has distributed capacity across eight facilities, each handling up to 15,000 to 21,000 vehicles annually. Recycling Today+4tatamotors.com+4Autocar Pro+4 This fits the geography of vehicle ownership and allows closer engagement with local authorities and dealers. For steelmakers and foundries, this means the scrap stream from these centers is not only cleaner but also geographically spread, reducing dependence on any one supply point.

On the policy side, states that have moved early to align tax concessions, land allotment, and permitting with the national scrappage policy have already attracted more facilities. Press notes and briefings from central and state agencies repeatedly stress the importance of clear timelines and single window procedures for RVSFs and recycling plants. Press Information Bureau+1 Where these are in place, private capital has followed. Where procedures remain slow, informal yards carry on, and the promise of the scrap policy remains on paper.

For overseas exporters, India’s trajectory signals both opportunity and change. Scrap imports are growing in absolute terms and remain a valuable outlet for suppliers, especially from the EU and Gulf. LinkedIn+3S&P Global+3ING Think+3 At the same time, rising domestic generation and higher quality domestic scrap will gradually raise the bar for imported material. Exporters that can document origin, grade, radiation checks, and environmental compliance will maintain access more easily, especially if India tightens import conditions as it pursues circularity goals. Those that compete on price alone may find the market more cyclical and crowded.

Section 6: Conclusion – From Policy Text To Metals Reality

India’s scrap policy is no longer a set of guidelines sitting in a PDF. It is starting to show up in plant design, corporate capex plans, ELV yards, and budget speeches. Steel capacity is climbing toward 300 million tonnes by 2030. Crude output has already passed 150 million tonnes a year. Steel demand is set to cross 190 million tonnes by the end of the decade, with infrastructure and construction in the lead. BigMint+2Reuters+2 None of these targets can be reached smoothly if raw material supply remains locked into imported ore, coking coal, and opportunistic scrap buying.

Domestic scrap usage is rising at a healthy pace. Ferrous scrap consumption has already grown more than 40 percent in just a few years, and domestic generation is tracking into the mid 40 million tonne range by 2030. Metalbook+1 But volumes alone are not enough. The quality, traceability, and economics of collection will decide whether scrap can support competitive EAF growth and genuine circularity, or whether it remains a supplement that takes pressure off during good times but cannot carry the system during shocks.

For mills, traders, recyclers, and policymakers, the path forward is clear. Treat scrap as a strategic raw material, backed by real investment in collection, sorting, and processing. Use the vehicle scrappage policy and national scrap policy to design business models that make compliance profitable rather than burdensome. Align contracts, pricing, and quality standards to pull informal volumes into the visible, taxed, and regulated stream. Watch the numbers closely for domestic generation, ELV flows, import volumes, and steel demand, because they will show whether India is closing the loop or still exporting too much embodied scrap value out of the country.

If the sector gets this right, India can achieve three goals at once. It can cut its exposure to volatile global raw materials, support its climate and circular economy objectives, and give its steel and downstream industries a cost and ESG edge in global markets. That is why understanding India’s scrap policy and domestic collection growth is no longer optional for metals professionals. It is central to any serious view of where steel and recycling are heading in South Asia and, increasingly, in the world.