India is one of the world's largest steel producers, and its steel demand is expected to keep growing with infrastructure, housing, manufacturing and transport. Scrap plays a crucial role in meeting this demand efficiently and with lower emissions. This guide looks at the state of steel scrap recycling in India, the policies shaping it, and what it means for industrial scrap sellers and buyers.
Why scrap matters for steel
Steel can be made in two broad ways:
- Ore-based routes: Blast furnace–basic oxygen furnace (BF-BOF) or direct reduced iron (DRI, sponge iron) routes starting from iron ore.
- Scrap-based routes: Electric arc furnaces (EAF) and induction furnaces (IF) melting scrap, often mixed with DRI or pig iron.
Recycling steel scrap uses significantly less energy and raw material than producing steel from ore, and results in much lower carbon dioxide emissions per tonne. As India and its customers focus on decarbonisation, often described as "green steel", scrap becomes more strategically important.
India has a large base of induction furnaces and electric arc furnaces, many of which rely on scrap. Demand for good-quality, well-graded scrap is therefore strong.
The Steel Scrap Recycling Policy, 2019
The Ministry of Steel notified the Steel Scrap Recycling Policy in 2019. Its broad aims include:
- Promoting metal scrapping centres that collect, dismantle, shred and process scrap in an organised, environmentally sound manner.
- Encouraging a formal, scientific scrap ecosystem with proper documentation and standards.
- Improving quality of domestic scrap to reduce import dependence.
- Setting guidelines for collection, dismantling and processing, including for end-of-life vehicles and other sources.
The policy provides a framework rather than a single programme, and implementation continues through related initiatives.
Vehicle scrapping policy and RVSFs
India's Vehicle Scrappage Policy, launched in 2021, set up a system for scrapping old and unfit vehicles through Registered Vehicle Scrapping Facilities (RVSFs) and automated testing stations. Key elements:
- Vehicles that fail fitness tests, or reach end of life as defined by rules, can be scrapped at RVSFs.
- Owners receive a certificate of deposit, which can offer benefits such as concessions when buying new vehicles, subject to applicable rules.
- Government vehicles above a certain age have been directed towards scrapping.
- RVSFs must follow environmental norms for depollution and dismantling.
For the scrap industry, RVSFs create a new, organised source of ferrous and non-ferrous scrap, including steel, aluminium, copper wiring and other materials, processed with documentation.
India's import dependence
Despite large domestic generation, Indian mills import substantial quantities of ferrous scrap, especially HMS and shredded grades, because domestic collection is fragmented and quality can be inconsistent. As organised collection, dismantling and shredding expand, domestic supply is expected to improve, but imports will likely remain important in the medium term.
Organised vs informal sectors
Much of India's scrap still flows through informal networks: door-to-door collectors, small dealers and traders. This sector is efficient at collection but often lacks:
- Standardised grading and quality control.
- Environmental controls, especially for hazardous materials.
- Documentation and tax compliance.
- Safety standards for workers.
Policy changes, including GST measures on metal scrap introduced in October 2024 (reverse charge on supplies from unregistered persons and TDS on B2B supplies), are pushing the trade towards formalisation. Industrial sellers and buyers increasingly prefer documented, transparent channels.
Market trends to watch
Rising scrap demand
Growth of EAF and IF capacity and decarbonisation targets support long-term scrap demand.
Quality premium
Mills increasingly pay premiums for clean, well-graded scrap that improves yield and reduces energy use.
Digital marketplaces
Online B2B platforms connect sellers and buyers across regions, improving price discovery and transparency.
Shredding and processing capacity
Investments in shredders, balers and sorting improve domestic scrap quality.
Non-ferrous recycling
Copper, aluminium and battery recycling grow with electrification, renewable energy and electric vehicles.
Regulatory tightening
EPR frameworks for e-waste, batteries, plastics and tyres, along with hazardous waste rules, require documented recycling channels.
What this means for industrial scrap sellers
- Segregation pays more over time: Quality premiums reward sorted, clean scrap.
- Documentation is essential: GST compliance, weighbridge records and certificates are now expected.
- Wider markets: Marketplaces let you reach mills and recyclers beyond your city.
- Plan for regular disposal: Steady supply of graded scrap is attractive to buyers and earns better terms.
What this means for buyers
- Diversify sourcing: Combine domestic and imported scrap, direct sellers and marketplaces.
- Invest in quality control: Gate inspection, radiation detection and XRF pay back through yield.
- Formalise supply chains: Documented, compliant suppliers reduce tax and reputational risk.
- Track policy: Duty, GST and import rules affect landed costs and margins.
The road ahead
India's scrap ecosystem is moving from fragmented and informal towards organised, documented and quality-focused. Policies on steel scrap recycling and vehicle scrapping, GST changes, EPR rules and decarbonisation goals all point in the same direction. Businesses that adopt segregation, transparency and compliance early will benefit most.
How scrap demand flows through the economy
It helps to see the full chain:
- Generation: Factories, construction and demolition, end-of-life vehicles, railways, ships, households and infrastructure replacement generate scrap.
- Collection: Collectors, dealers, contractors, RVSFs and industrial sellers gather it.
- Processing: Cutting, baling, shredding, sorting and grading prepare it for melting.
- Trading: Traders, marketplaces and importers move it to consumers.
- Consumption: Induction furnaces, EAFs, foundries and integrated plants melt it into new steel.
- Products: TMT bars, sections, castings, pipes and sheets go back into the economy, eventually returning as scrap.
Improvements anywhere in this chain, better segregation by industries, organised collection, efficient processing and transparent trading, raise the quality and quantity of domestic scrap.
What industrial sellers can do now
- Introduce segregation and records to capture quality premiums.
- Sell through documented channels to stay compliant with GST rules on metal scrap.
- Consider regular contracts to provide steady, predictable supply.
- Use marketplaces to reach buyers who value your grades most.
- Handle hazardous materials through authorised channels under EPR and waste rules.
What mills and foundries can do now
- Invest in gate quality control, radiation detection and grade analysis.
- Build relationships with organised domestic suppliers and RVSFs.
- Use landed import cost as a benchmark, not the only option.
- Track policy changes in duties, GST and environmental rules.
- Report scrap usage as part of decarbonisation and sustainability disclosures.
Key terms
- EAF: Electric arc furnace, melts mostly scrap using electricity.
- IF: Induction furnace, common in Indian secondary steel, melts scrap and sponge iron.
- DRI / sponge iron: Iron made by reducing ore without melting, used alongside scrap.
- RVSF: Registered Vehicle Scrapping Facility.
- EPR: Extended Producer Responsibility.
What to watch over the next few years
- Growth of organised scrapping centres and RVSFs, and how quickly they reach smaller cities such as those in Purvanchal.
- Changes in import duties and inspection rules for metal scrap, which affect landed costs for mills.
- Carbon reporting and green steel demand from large customers, which may increase premiums for clean scrap.
- Digital traceability, including e-invoicing and digital weighbridge records, which make documented scrap more valuable to compliant buyers.
Why this matters for Purvanchal
Eastern Uttar Pradesh has a growing base of industry, infrastructure projects and vehicles, which means growing scrap generation. Organised collection and documented trading in the region keep value local and supply mills with better-graded material.
Kabadi24's role
Kabadi24 is a B2B scrap marketplace headquartered in Ramnagar Industrial Area, Varanasi, with a Gurugram branch and a pan-India network. We connect industrial sellers with mills, foundries, smelters and recyclers, with verification, grading, weighbridge weighment, logistics and GST documentation. Our trade desk also handles imports and exports. We aim to help the industry move towards organised, transparent and responsible recycling.
Conclusion
Steel scrap is central to India's steel growth and decarbonisation. Policy frameworks, vehicle scrapping, GST reforms and digital marketplaces are reshaping the trade. For sellers and buyers alike, the winning formula is quality, transparency and compliance.