EU scrap curbs may raise costs for Indian metalmakers, threaten MSMEs

A proposed EU rule could restrict metal scrap shipments to India, forcing manufacturers to find alternative supplies and potentially raising raw material and logistics costs.

India’s metalmakers could soon face a costly question: where will they find the scrap needed to keep their factories running? A proposed European Union (EU) rule that could restrict shipments of metal scrap to India threatens to disrupt supplies of a key raw material, potentially raising production costs and squeezing manufacturers, particularly smaller businesses.

The proposed restrictions could affect steel, aluminium and copper manufacturers that rely on imported scrap, forcing them to look for alternative suppliers. Industry executives and experts warn that sourcing material from elsewhere may not be easy, with higher procurement and logistics costs potentially hurting export competitiveness.

India imports around 13 million tonnes of metal scrap annually, with Europe accounting for 22-23% of its non-ferrous scrap imports. Any disruption in these supplies could affect companies such as Jindal Stainless, Jindal Aluminium and CMR Green, said Dhawal Shah, partner and managing director of Metco Ventures LLP, a metal scrap trading company.

Imports account for about a quarter of the metal scrap consumed in India, according to data from Material Recycling Association of India. Metal scrap is a key raw material for steelmakers, aluminium producers and copper recyclers. It is also used by downstream manufacturers without mines, who rely on purchased scrap to make finished products for construction, automobiles, electrical equipment and infrastructure.

Supply squeeze

The European Commission’s draft list of countries eligible to receive certain non-hazardous waste excludes India from receiving ferrous and non-ferrous metal scrap. The Commission has said India has not demonstrated, to its satisfaction, that all necessary measures are in place and implemented for the environmentally sound management of metal waste.

The consultation on the proposed list remains open until 16 October 2026. Under the EU’s Waste Shipment Regulation, the restrictions could take effect from 21 May 2027. The Commission says the first list of authorised countries will be established by the end of 2026.

The proposed curbs could force Indian manufacturers to turn to other markets, where adequate supplies may not be readily available. This could push up raw material costs, hurt the competitiveness of Indian manufacturers in export markets and put pressure on micro, small and medium enterprises (MSMEs), Shah said.

Other major sources of scrap include West Asia, which accounts for 28% of India’s imports. The UAE is the biggest supplier from the region and has imposed a temporary export ban, due to continue into October. Saudi Arabia has also imposed duties to discourage exports. North America, including the US and Canada, accounts for another 25%, said Shah.

“As the EU is a major source of metal scrap for India, the proposed framework could disrupt established supply chains and constrain access to high-quality secondary raw materials. This could raise procurement and logistics costs, particularly for MSME recyclers and downstream manufacturers, while forcing businesses to source from more distant markets,” said Saurabh Agarwal, tax partner at EY India.

Industry players have also acknowledged the disruption.

“Any restrictions on scrap exports from the European Union could tighten global scrap availability and we don’t believe there would be an impact on the procurement cost, not only for EU-origin material but across other sourcing regions due to the interconnected nature of global scrap markets, “ GMR Green Technologies spokesperson said in an email to Mint. The company added that it is diversifying its sourcing to mitigate the risk.

However, GMR Green Technologies said the proposal remains at a draft stage, making it premature to draw definitive conclusions about its final impact. The company expects further consultations and stakeholder discussions as the legislative process progresses.

Cost pressure

For the larger players in the stainless steel industry, such as Jindal Stainless, we have already developed alternate routes for securing nickel bearing raw materials, which constitute the majority of scrap imports into the country, said Abhyuday Jindal, managing director, Jindal Stainless in an email. However, the company is “engaging constructively with the Government of India” to highlight the “potential implications of the proposed regulation and explore suitable policy and diplomatic avenues,” he said.

Europe currently exports substantial volumes of metal scrap to international markets, indicating that not all the scrap generated in the region is consumed domestically, Jindal said. “We have also discussed the issues with our European suppliers, and they have second our notion of amendments in the policy.”

Industry executives are now calling on the Indian government to engage with the EU and seek a review of the proposed restrictions.

“India needs to engage with the European Union at the government level and seek a more balanced approach. We have already approached the government to address the issue,” Shah said.

He said the EU should explain why Indian recycling facilities do not meet its environmental standards, rather than impose restrictions without a clear assessment. India should also push for continued access to European scrap, particularly as both sides are working towards a free trade agreement, he added.

Agarwal said India should use the consultation period to submit evidence of environmental compliance, regulatory oversight and recycling capacity at individual facilities.

The proposal is not yet final, giving India an opportunity to make its case. Agarwal cited the EU’s recent withdrawal of its proposed 15% export duty on aluminium scrap as an example of how sustained bilateral engagement can influence policy.

About the Authors

Dipali Banka is a Mumbai-based journalist who treats corporate reporting less like a beat and more like a puzzle to be solved. This invariably means she has to read through annual reports and speak with leaders and analysts. She tracks policies, deals, and the pulse of industries spanning metals, mining, paints, and cement, alongside aviation. She started out as an intern at The Statesman and then completed her postgraduate diploma in journalism from Asian College of Journalism, Chennai, in 2025. Relentlessly curious at heart, Dipali is driven by the simple urge to understand how things work and who they impact. Armed with an enduring fascination for steel and aeroplanes, she moves through the churn of daily news with focus, turning complexity into clarity without losing the story. She is particularly committed to shaping numbers into objective narratives, having little appetite for vagueness that gets in her way.<br><br>Outside the newsroom, Dipali is an unapologetically loud presence who values long conversations and longer walks to unwind. She devours books of all kinds and can often be found indulging in the lyrical sway of contemporary ghazals. She ardently believes that her relationship with her bylines is more sacred than it would ever be with anyone across the human race.

Nehal chronicles India’s top conglomerates for Mint. From navigating the complexities of big-bang mergers and large-scale fundraises to decoding high-profile recruitments and seemingly inexplicable corporate pivots, Nehal focuses on unpacking the long-term strategies of the country’s most influential business houses. He aims to provide readers with a clear-eyed view of how these corporate titans shape the broader Indian economy.<br><br>His professional journey began at The Economic Times in 2018, where he spent over five years before joining Mint in 2023. Over his career, he has tracked diverse sectors like automobiles, metals, cement, power, infrastructure, and renewable energy. He also keeps a close watch on the intricacies of corporate finance and corporate governance. This wide-ranging sectoral experience allows him to better understand India’s large conglomerates that sit at the confluence of these vital industries.<br><br>Nehal studied mechanical engineering from the Pune University and graduated with distinction in 2017. Driven by a passion for storytelling, he pivoted to journalism immediately after, attending the Asian College of Journalism in Chennai. While his time in the newsroom has made him a healthy sceptic, his engineering roots keep him perpetually inquisitive about how things work—and why they fail.<br><br>He actively encourages readers to reach out for feedback, collaboration, or news tips. Nehal can be reached via LinkedIn or directly at nehal.chaliawala@livemint.com.