Steel Scrapping Policy


  • Steel industry uses carbon as the main reducing agent as also as a fuel for steel production.
  • GHG emissions of the Indian steel industry is 0-2.8 tonnes of CO2 per tonne of crude steel, against global average of 1.8 tonne of CO2.
  • Two seminal announcements have been made in Budget FY22, viz.introduction of vehicle scrapping policy and doubling ship-breaking capacity to 9 million tonnes per year. This will minimise dependence on import of scrap and cause a reduction of the GHG footprint of iron & steel.

Use of Scrap:

  • Most steel-producing countries are trying to bring down emissions by shifting from iron-ore-based production to scrap-based production.
  • This route can bring CO2 emissions down to below 0.5 tonne of CO2 per tonne of steel.
  • Although most steel-producing countries are using Electric Arc Furnaces (EAF)for scrap-based production, in India, both EAF and Induction Furnaces (IF) are used.
  • The main CO2 load in EAF-based steel production doesn’t come from the off-gas but from producing the electricity used in melting of the scrap.
  • Thus, this can be further reduced if renewable power is used as a source of electricity.

Saving in forex spending

  • Availability of ferrous scrap in India is very limited—around 25 million tonnes annually from domestic sources. In 2018-19 and 2019-20, the country imported nearly 6.5 million tonnes of scrap each year and thus large forex spending was incurrred. With the announcement of vehicle scrapping policy, steel industry can expect enhanced indigenous availability of ferrous scrap.

Circular Economy:

  • The quality of the steel produced is dependent upon the quality of input material and hence any improvement made in ensuring quality of scrap will have marked influence on the steel produced.
  • This shall strengthen the process of resource efficiency & circular economy as considerable natural resources shall be conserved with significant reduction in emission and it will help in moving towards a sustainable steel industry.


  • The announcement of the vehicle scrapping policy couldn’t have come at a better time for steel industry in India, as well since the country lacks desired quality of coking coal and natural gas is also imported.