Posted on 26 Nov 2025
India is moving quickly to build a proper, organised scrap ecosystem, and the timing could not be more important. As the world pushes harder on decarbonisation, India’s steel industry – one of the fastest-growing anywhere – is realising that scrap will play a huge role in shaping its low-carbon future. But while the shift is happening, the country still faces a big scrap shortage that will take years to fix.
Today, India has 182 approved Registered Vehicle Scrapping Facilities (RVSFs), with around 120 of these actually operating.
These centres mark a major change from the old informal scrapyards that dominated the sector for decades. Instead of dismantling cars on the roadside or in small unregulated yards, the new centres offer proper depollution, safe dismantling, material sorting and full paperwork.
This improves the quality of scrap and gives steelmakers cleaner, more reliable material. It also supports India’s new End-of-Life Vehicle (ELV) rules, which require automakers to use a certain share of recycled steel in future.
Cleaner scrap is especially important for electric arc furnaces and many companies have started reprocessing RVSF scrap to make it suitable for EAF use.
The potential is huge. India generates around 3-4 million end-of-life vehicles every year, and this number is rising by 8-10% annually. If even half of these vehicles reach formal facilities, they could produce 1-2 million tonnes of steel scrap and roughly 250,000 tonnes of aluminium.
But the reality on the ground is mixed. Many people still avoid scrapping their old cars and two-wheelers. Some states are much more proactive than others. Uttar Pradesh in northern India, for example, alone accounts for nearly a quarter of all RVSFs in the country.
Experts say India needs better incentives to encourage people to scrap vehicles, along with more awareness of how recycling supports cleaner roads, cleaner cities and cleaner steel.
Scrap is becoming even more important as India moves towards producing 300-500m t/y of steel in the coming years. Using more scrap reduces the need for coking coal, which India imports heavily.
It also helps at a time when the quality of iron ore is declining. Higher alumina and silica levels in iron ore are pushing up production costs, and mining logistics remain tight in important belts such as Sundargarh and Keonjhar in eastern India. All of this makes scrap a more attractive and cleaner alternative.
India currently generates around 32mt of scrap each year. This could rise to 47mt by 2030. However, demand may cross 60mt. That leaves a gap of around 16mt. Closing this gap will not be easy.
Collection is still scattered, scrap purity varies widely, and there are only a few modern sorting and processing plants. Importing scrap will also not solve the problem, because developed countries and key scrap exporters like the US and EU are tightening rules on scrap exports, which means less material will be available in global markets.
Large steel companies are starting to act. JSW Steel, for example, sees scrap as the quickest way to cut emissions. Rohit Agarwal, who heads the company’s scrap business, told Kallanish that India’s iron ore-based steelmaking route emits 33% more than the global average. He points out that steel makes up 12% of India’s total emissions even though the industry accounts for only 2-3% of GDP.
At JSW, every 1% increase in scrap usage cuts carbon intensity by around 0.02 tonnes of carbon dioxide, a small number individually but a big impact at scale.
India has around 22.5 million end-of-life vehicles in total. If even a meaningful share of them were processed properly, the country would not need to import scrap at all. But at the moment, less than 1mt of scrap is formally recovered each year.
Complicated Goods and Services Tax (GST) rules, slow implementation of policies, and limited domestic shredder capacity are still holding the system back.
JSW is now building two 0.5mt scrap plants in Khopoli, Maharashtra, and Chennai, Tamil Nadu, and is also developing a 1mt scrap and natural gas-based DRI plant in Kadapa, Andhra Pradesh. The company says it is using digital tracking tools to monitor scrap quality and vendor performance more closely.
Market experts believe that for India to truly unlock the value of scrap, stronger policy support and better coordination between states will be essential.
With global scrap supplies tightening, a strong and reliable domestic scrap network is no longer just helpful, it is now crucial for India’s path towards low-carbon steelmaking.
Source:Kallanish
