Scrap Import Business

It has been seen in recent years that people are preferring to start their own businesses instead of joining multinational companies. This recent trend resulted in an abnormal hike in the number of newly registered businesses in the last three years. In India, 122721 new businesses were incorporated in 2020 while this number reached 167076 in 2022. This is a huge thirty-six per cent growth in just three years.

With such huge numbers and diversified interests of entrepreneurs, every industry is witnessing growth. One such industry is the recycling industry. The immense profit, availability of scrap and the encouragement of pollution control authorities are a few reasons that the scrap recycling industry is attracting new entrepreneurs to start a scrap business in India. And if that is not enough businesses even importing scrap from other countries to generate even more profits by reselling and recycling it. This is why, in this article, we will be talking about all the rules and regulations which you need to know before you start your Scrap Import Business in India.

What Is Scrap Import Business?

Many people may consider that Scrap and Waste are the same but it is not the case. Scrap is different from waste. Waste can be generated from any household or other institutions but scrap is generated during the manufacturing process. Waste can or cannot be recycled and used as raw materials but the scrap can again be used as raw material if processed appropriately. Waste can be electronic trash, broken plastic materials, metal equipment, or any other material that may or may not contain something that can be recycled and converted into a valuable and useful product. If this waste is segregated properly and reached to the recycling facility it can also be converted into raw material that can be used by the manufacturers.

In the manufacturing process of various items, the raw material goes through a long process that also involves trimming, shaving, turning and moulding. These processes generate a lot of unusable pieces of raw material. This useless trash is called Scrap. It can be metal, plastic, paper or any other material. When this scrap is bought from the manufacturing units, processed in a plant and sold to the manufacturers at a higher price, it is called Scrap Business. Many countries may not be able to process their scrap or it may not be economically beneficial for them, so they sell out their scrap to other countries. When this scrap is imported, processed and sold in another country, it is called Scrap Import Business.

There are various economic and environmental benefits of a Scrap Import Business in India. Some major benefits are described below-

• Financial Benefit

The manufacturers and producers sell the scrap at very low prices because it cannot be reused until processed properly. The Scrap processors grab this opportunity, collect the scrap, and sell it to the manufacturers and producers at a higher rate but lower than the fresh raw material. They use the processed raw materials in new products because of the cheaper price and scrap processors enjoy financial benefits out of it.

• Resource Saving

The Scrap businesses contribute towards the saving of natural resources and pave the way to sustainable development. The utilisation of scrap materials back into production saves the exhaustible resources of the planet and promotes the most efficient way of living.

• Cost Efficient

The reusability of the resource not only saves the resource but also the energy that is required to mine out that resource. The scrap processing costs less than obtaining it from the mines and hence is a profitable option to use for manufacturing.

• Clean Environment

Apart from the scrap, waste is also recycled to obtain reusable raw materials. It promotes cleanliness and directly benefits the environment as people voluntarily collect, segregate and sell the recyclable waste to scrap and waste processors.

Scrap is divided into various categories based on their material as the following-

• Scrap Battery Recycling

The growth in the mobile industry has increased the circulation of smartphones in the market and because they run on battery, the battery waste is only increased. Apart from them, there are many other popular battery-powered devices which makes it a good option to set up Scrap Battery Recycling Plant.

• Scrap E-Waste Recycling

The world is moving towards modernization and the use of electrical and electronic devices is increasing year on year. This ensures the availability of E-waste for recycling and hence a lucrative option to choose for setting up a Scrap Electronics Recycling Plant.

• Scrap Plastic Recycling

Plastic is not a degradable material and it causes a lot of harm to the environment. Pollution Control Authorities are promoting the recycling of plastic with various policies. It is a good time to contribute towards a healthier environment by establishing a Scrap Plastic Recycling plant.

• Scrap Vehicle

Various standards provided by the transport department do not allow older vehicles to run on the roads because of the greater harm they do to the environment. All these older vehicles are of no use even if they are technically perfect. This is why a scrap vehicle processing plant can be proved very profitable for businesses.

• Scrap Metal Recycling

Metals are hugely used in the equipment that we use on a daily basis. Hence waste and abandoned metal items are found in abundance. A scrap metal recycling plant can utilise this business opportunity. Metals are further divided into two categories-

1. Ferrous Metals - Iron, Steel etc.
2. Non-Ferrous Metals - Aluminium, Brass, Carbide, Copper etc.

Some other available materials which you may consider processing in your scrap material recycling facility are medical waste, paper waste, water waste, construction waste, and textile waste.

Authorities Involved In The Scrap Import Business In India

DGFT stands for Directorate General of Foreign Trade. It is a regulatory body that monitors the import, export and foreign trade in India. It also makes rules and procedures for the trade, import and export of goods and services. If you are importing or exporting any item that is listed and regulated by DGFT then you have to ensure that all respective guidelines are followed, scrap import registration is done, and the scrap import license is acquired.

DGFT has classified various kinds of scrap as restricted items for import and hence you have to ensure that you are following the due process as established by the laws applicable to that specific item. The importer is required to take scrap import authorisation and permission from DGFT before importing the scrap. DGFT grants a scrap import licence to the importer if he complies with the specified rules.

Once you imported the scrap, you may want it to process to generate a profit. At this stage, to run your scrap processing plant, you may need to comply with the further rules as specified by the respective State Pollution Control Board and Central Pollution Control Board. Depending on the type of material, you must have to fulfil the requisite compliances such as plastic waste, e-waste, battery waste etc.

Various types of scrap are defined above. Before proceeding further in the process, you should finalise one or more categories that you want to import. Then you should verify whether the item you selected falls in the category of restricted or prohibited items or not. This list can be obtained from the resources available on the DGFT website. Ensure that you do not select any item that is prohibited because no authorisation or permission will be granted by DGFT for such import. If the item you want to import is a restricted item then you have to obtain authorisation from the DGFT portal.

The prohibited items are potentially dangerous in nature and include some items that are notified as illegal by the central government. Some major prohibited items are radioactive waste, arms, ammunition, mines, shells, cartridges, mobile phones without serial numbers, and substances potentially harmful to the environment. If you submit the scrap import application for these items then the application will be rejected and not be considered for the grant of scrap import licence.

You should go through a list of required documents and ensure that these documents are available to you. Some major documents are the Authorisation certificate, IEC Registration, Shipment Certification etc. You must also have acquired the land where you want to establish the plant and proper arrangement of the transport is done. Permits and environmental clearances are required to be obtained for such land in advance.

The site where you will be processing the scrap comes under the jurisdiction of the State Pollution Control Board. You may need a different set of documents based on the state you are operating in and the nature of your entity. Some important documents that are required for the Scrap Import Business in India are as follows-

For Importing Scrap

• Incorporation Certificate
• GST Certificate
• Articles of Association or Partnership Deed
• ID Proof of the Proprietor, Partners or Directors
• Address Proof of the Entity
• DGFT Authorisation
• Import Export Code (IEC)
• Pre-Shipment Certificate
• Recognition of PSIC by the DGFT
• Storage Plan Layout
• Details Description of the Scrap or Waste to be Imported
• Notorised MoU

For Consent To Establish (CTE)

• List of Proprietors, Partners or Directors
• SSI Registration
• Site Plan (Location)
• Site Plan (Internal Layout)
• Builtup Area and Open Land
• Project Report with Details of Process
• Break-up of Water Usage
• Boiler and Fuel Details
• Pollution Control Measures
• List of Raw Materials, Products and By-Products
• Water Authority Permission
• Other Permissions or Authorisations (if applicable)

For Consent To Operate (CTO)

• The Break-up of Water Uses and Balance
• Details of Process with Flow Diagram
• Environmental Statement
• Pollution Control Measures
• Fuel Consumption Certificate
• List of Raw Materials, Products and By-Products
• Water Authority Permission
• Details of Steps Taken to Reduce Waste Generation
• Waste and Water Analysis Report by Third Party
• Environmental Clearance Certificate
• Other Permissions or Authorisations (if applicable)

After completing the document preparation part, you may proceed with the process to start your Scrap Import Business and Establish a Scrap Processing Plant. The process is divided into three parts, one for the scrap import process, the second to take the scrap recycling certification, authorization and consent to establish your Scrap Processing Plant and the third to keep the Scrap Import Business running and fulfil compliance requirements for Scrap Import Business in India.

Importing Scrap From Overseas In India

• The authorisation is required to be obtained from DGFT for the import of restricted items along with the IEC code.
• These items should not include toxic, hazardous, or radioactive substances.
• Shredded scraps are allowed to be imported through all ports while the un-shredded scraps are required to be imported through the designated ports only.
• Pre-Shipment Inspection Agency (PSIA) should issue a Pre-Shipment Inspection Certificate (PSIC). The PSIA must be recognised by the DGFT. The recognition can be obtained online through the DGFT portal.
• A contract with the exporter and Pre-Shipment Certificate are to be furnished at the customs.
• The shipment is physically inspected at the port and assessed by the Central Excise Officer.
• It is the severe responsibility of the importer and exporter to ensure that the consignment is in accordance with the PSIC.
• PSIA should take pictures and videos of the inspection process and upload them on the DGFT website.

Obtaining Consent to Establish (CTE)

• Every industrial and commercial establishment is required to obtain consent to establish from the State Pollution Control Board before starting operations. It works as a NOC for scrap recycling provided by the state government.
• The proprietor can apply online through the web portal managed by the state authority.
• After the submission, the officers of the respective State Control Board or Pollution Control Committee inspect the scrap recycling application and decide on it.
• If the application is passed then the CTE is issued for a validity of five years if environmental clearance is not yet obtained while seven-year validity is given to those that have valid environmental clearance certificates.
• Environmental Clearance has to be sought, if applicable, from the Ministry of Forest, Environment and Climate Change, Government of India or State Environmental Impact Assessment Authority.

Obtaining Consent to Operate (CTO)

• The proprietor is required to obtain consent to operate at least thirty days before the start of operations.
• The scrap recycling application for CTO is also submitted through the online portal managed by the state authority.
• The concerned officer will inspect and verify the details of the application and accordingly, he will either accept or reject it.
• After scrutinising the application and the report of the concerned officer, consent to operate is granted to the proprietor.

The authorisation obtained by the DGFT (Directorate General of Foreign Trade) is valid for a period of eighteen months from the date of authorisation. Once this period is over, the importer is required to get another authorisation from the DGFT web portal. The consent granted by the state for the establishment of the scrap processing plant is valid for a period of five to seven years based on the status of environmental clearance sought by the proprietor but for micro and small-scale green category projects, this validity is fifteen years with CTE and CTO combined. The validity of consent to operate also varies from five to fifteen years based on the category of the projects. The proprietor can extend the validity period by renewing it at least thirty days before the expiry of the consent by making an application on the web portal of the respective state.

Why Corpseed?

We, at Corpseed, have a team having extensive knowledge relating to various horizons of Import and Export Laws and Regulations applicable in India and overseas as well as the compliances of running a recycling plant. We perform desk-based research, documentation, and coordination to provide consultation to clients in establishing their businesses and fulfilling the necessities as prescribed by the applicable rules.