As the European Union mulls over implementing new regulations restricting the export of scrap metal to non-OECD countries, a global shift is underway. These policy shifts are expected to tighten the availability of scrap metal in the international market, compelling countries like India to reassess their reliance on imported scrap steel. In this evolving landscape, the importance of harnessing domestically generated scrap has become more critical than ever.
India, which is striving to decarbonize its steel sector in alignment with its 2070 net-zero ambitions, finds itself at a crucial juncture. Among the various strategies identified to achieve this low-carbon transition, the increased use of scrap steel in secondary steelmaking stands out as one of the most viable and impactful solutions. Every tonne of scrap steel used in production saves 1.1 tonnes of iron ore, 630 kg of coking coal, and 55 kg of limestone. Beyond raw material conservation, the benefits are even more significant in terms of sustainability: energy consumption drops by 16-17%, water usage is cut substantially, and greenhouse gas emissions fall by a massive 58%. While the advantages of secondary steelmaking are well known, but the pressing question is, does India have enough scrap steel in its reserves to intensify its steel sector’s decarbonization?
As per the target stipulated by the National Steel Policy of India (2017), the country aspires to build a steel production capacity of 300 Million Ton (MT) by 2030. In addition to expanding secondary steel production, India aims to augment the share of scrap steel consumption by steel producers from the current 15 percent to 25 percent over the next five years, and eventually increase it to 50 percent by 2047.
Despite concerted efforts, such as the announcement of the Steel Scrap Recycling Policy (2019) for creating an ecosystem that supports the development of the secondary steel sector, the limited availability of scrap steel impedes the expansion of the secondary steel sector. The sector has witnessed a fall in terms of its contribution to the national output of steel from an earlier 55% in 2015 to 40% as of 2022. As of 2023, the volume of recycled steel in India stood at 30 MT, with the country remaining a net importer of scrap steel in 2021-22 at a quantum of 4 MT. Furthermore, as projected by the Material Recycling Association of India (MRAI), India is likely to import roughly 30 MT of ferrous scrap by 2030 to fulfil the aforementioned target of building a 300 MT steel production capacity.
Even if 30 MT of scrap steel is imported in 2030, and the current volume of domestic availability of scrap steel continues, there will still be a substantial shortfall. Given this scenario shifting to a circular economy framework that follows the principle of resource efficiency thus forms a crucial link for meeting the proposed target.
To address the growing importance of scrap steel in India’s decarbonization journey, it is essential to identify its key sources. A recent study by the Indian Council for Research on International Economic Relations (ICRIER) highlights major scrap-generating sectors, including vehicular metal scrap, processed steel from steel plants, end-of-life machinery, railways, and shipbreaking. The analysis provides sector-wise estimates of scrap generation and recovery, projecting a potential demand of 119 million tonnes (MT) of scrap steel by 2047. However, estimates suggest that only about 47 MT of domestic scrap will be available from these sectors by then. Even after factoring in improved recovery efficiencies, domestic availability is expected to rise marginally to 49 MT. These projections are based on ICRIER’s Sampada 4.0 model, which maps the availability and flow of scrap steel within the economy through 2047. Originally a static tool, Sampada has now been upgraded into a dynamic, intertemporal model that integrates multiple growth scenarios for more robust forecasting. The study also attempts to map the quality of scrap by identifying key grades, such as SS 304 and SS 316, commonly used in secondary steelmaking for industries including automotive, defence, heavy machinery, and wind energy. Grades like SS 310 and MS 513 were also traced, largely originating from vehicular and machinery scrap streams. Understanding of these scrap steel grades is important because it determines both the recovery efficiencies and the ultimate end uses to which it will be put.
Although the outlook for future scrap steel availability appears concerning, a more comprehensive perspective may help highlight existing opportunities. It has been observed that the metal waste generation figures reported by Central Pollution Control Board (CPCB) may not fully reflect the ground reality, largely due to data limitations. To elaborate, using CPCB’s estimates for Municipal Solid Waste (MSW) treatment, it was found that 20.05 MT of dry waste is treated. Sub-dividing this number further, the analysis portrays a figure of 14.03 MT of scrap steel-related dry waste in 2021–22. As compared to this, Annual Survey of Industries (ASI) data indicates significantly higher domestic scrap usage—around 31.5 MT (2.25 times). This number is likely even higher when accounting for informal producers involved in manufacturing items such as utensils and metal rods. This gap suggests that actual scrap usage may be much greater than what is officially reported, pointing to the extensive role of informal intermediaries in the scrap steel supply chain. These actors often remain unaccounted for in formal datasets, highlighting a key limitation in the comprehensiveness of CPCB’s data. Therefore, it is possible to suggest that the actual availability of scrap from domestic sources may be much larger than estimated by the present analysis. This issue of informal scrap supply chain actors and their potential, thus, merits further investigation.
A large segment of India’s scrap steel economy presently operates in the informal sector, with disintegrated supply chains and limited standardisation. Bridging these structural gaps will be crucial to enhance scrap steel availability in the forthcoming decades. There is an urgent need for clear policy interventions aimed at integrating informal actors into formal value chain by encouraging the adoption of standards for collection and processing. Enhancing supply chain linkages, improving transparency, and boosting collaboration between formal and informal stakeholders will be key to unlocking greater scrap steel availability. Along with this, there is a critical need to establish national quality standards for scrap steel to ensure consistent product quality. The chemical and physical composition of scrap steel directly influences the quality of the final steel products. In the absence of standardised guidelines, impurities may persist in the scrap, compromising the mechanical properties and overall usability of the steel. Introducing quality benchmarks will help minimise input variability, enhance recycling efficiency, and ensure that end-use steel products meet required performance standards.
(Views expressed are the author’s own and don’t necessarily reflect those of ICRIER.)
