ASEAN Free Trade Hits Recycling Indian Industry

· TCS Roadblock, Refunds Tardy

[ABS News Service/29.01.2022]

The Material Recycling Association of India (MRAI) has urged Union Finance Minister Nirmala Sitharaman to rectify the inverted duty structure wherein all finished products of aluminium, copper and copper alloys in the form of tubes, sheets and rods can be imported duty free from ASEAN countries, while 5 per cent import duty is levied on the import of essential raw materials such as aluminium and copper scraps and copper cathodes to manufacture the same products in India.

These raw materials attract duty between 5-2.5 per cent and are put in negative list of offering under the FTA.

‘Market share lost’

Though duty on copper scrap was halved to 2.5 per cent last budget, it is still very high considering the cost of the material. The issue has also created significant ripple effects and domestic companies have lost significant market share to foreign entities under the FTA. This has made it nearly impossible to survive, which in turn, has led to a substantial loss of jobs, said MRAI in its pre-budget presentation to the minister.

Since India does not have enough good quality metal scrap, the secondary metal recycling industry has requested the government to remove import duty levied on metals scrap to promote Make in India.

The non-ferrous metal items being of high value the amount of refund of the Tax Collected at Source (TCS) is unusually huge. This leads to unwarranted scrutiny and needless inconveniences.

‘Reduce GST’

The association has requested the government to remove metal scrap from the purview of TCS for smooth functioning of the non-ferrous metals trade and industry.

Additionally, the body has also requested the government to reduce GST rate on non-ferrous metals from 18 per cent to 5 per cent as it will not only reduce incentive for fake billing but also shift the burden of tax compliance on manufacturers this making the supply chain more tax compliant and increase the revenue of GST from the metal recycling sector.