🇮🇳India

स्क्रैप सोर्सिंग से बचाव (Avoidance of Scrap Due to Tax Burden)

1 verified sources

Definition

Tax and ITC fraud risk is so high that manufacturers are choosing expensive DRI (direct-reduced iron) over cheaper domestic scrap. AIIFA (All India Induction Furnaces Association) president stated: 'a lot of manufacturers avoid using scrap and go for the alternate raw material just because of this unorganised factor in the scrap industry.' DRI usage increased 25 percentage points in 3 years.

Key Findings

  • Financial Impact: ₹500+ crores annually in lost domestic scrap utilization (difference between DRI cost and scrap cost × volume shift); equivalent to 25-30% capacity loss in scrap-dependent mills
  • Frequency: Ongoing; structural shift in raw material sourcing
  • Root Cause: GST reverse charge on scrap (18%) vs. lower perceived risk on DRI imports; Unorganized scrap supplier base = high audit/fraud risk; Manufacturer risk aversion to scrap purchases

Why This Matters

The Pitch: Secondary steel makers are abandoning domestic scrap sourcing due to tax + fraud risks. DRI share rose from 15-20% to 40-45% in 3 years. This represents ₹500+ crores in lost domestic scrap market.

Affected Stakeholders

Procurement, Supply Chain, Manufacturing

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Financial Impact

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Methodology & Sources

Data collected via OSINT from regulatory filings, industry audits, and verified case studies.

Evidence Sources:

Related Business Risks

SARA EPR अनुपालन त्रुटि - गलत नियामक ढांचा

₹50,000 - ₹500,000 annually in misdirected SARA compliance consulting + CPCB registration and reporting costs + recycling certificate purchases (cost varies by recycling volumes and metal type); phased investment in supply chain modification for recycled content compliance estimated ₹5-50 lakhs by 2031-32 depending on production scale.

BIS प्रमाणपत्र के बिना सीमा शुल्क अस्वीकृति और व्यावसायिक रुकावट

Per shipment: ₹50,000–₹500,000 (port detention, re-logistics, demurrage). Estimated annual impact for mid-sized metal treatment firm: ₹5–20 lakhs if 1–2 rejections occur.

BIS प्रमाणीकरण प्रक्रिया में बहु-चरण संपत्ति और समय विनाश

Per product certification: 40–120 hours internal labor (QA, compliance, documentation) × ₹500–₹1,000/hour = ₹20,000–₹120,000. Annual impact for company with 3–5 metal products: ₹60,000–₹600,000.

BIS प्रमाणीकरण विलंब के कारण बाजार प्रवेश में देरी और बिक्री हानि

Per new product: ₹5–50 lakhs in lost revenue (based on average quarterly sales ÷ 3 for 2–4 week delay). For firm launching 2–3 products/year: ₹10–150 lakhs annual revenue drag.

BIS कारखाना ऑडिट और नमूना संग्रह के कारण उत्पादन क्षमता में बाधा

Per audit cycle: 2–5 days of production disruption × ₹2–5 lakhs/day capacity loss = ₹4–25 lakhs per cycle. Annual (2–4 audits/year): ₹8–100 lakhs. Additional: Failed sample testing = 15–30% rework + material loss (₹1–3 lakhs).

BIS प्रमाणपत्र दस्तावेज़ प्रबंधन में त्रुटि और परिवहन दायित्व हानि

Per shipment error: ₹50,000–₹500,000 (customer credit note, rework, re-shipment). Annual (5–10% of shipments affected): ₹5–50 lakhs revenue leakage for mid-sized firm.

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