India has begun to combat tax evasion in the scrap sector

The Indian authorities have launched a large-scale audit of scrap traders for evading goods and services tax (GST), according to Kallanish.

The State GST Department (SGST) has deployed inspection teams in various locations to check records, physical stocks, and transport documentation.

These steps are being taken based on intelligence indicating widespread abuse in the secondary metals trade, which is damaging to government revenues and creating unfair competition.

Officials are checking vehicle movements, road toll records, and other information to identify discrepancies. Sources report that some traders may have claimed input tax credit (ITC) without any actual movement of scrap.

One scrap trader in Mumbai notes that the move was long overdue, as small collection points have been operating in the shadows for years with minimal documentation. Meanwhile, official players are at a disadvantage.

Market participants expect the initiative to affect unorganized scrap traders, especially those operating with limited compliance with legal requirements.

SGST plans to increase the number of inspections in the coming weeks.

India has declared its intention to increase the share of scrap in production from 15% to 50% by 2047. This will require additional supplies, which are planned to be obtained through imports. The country is already one of the world’s largest importers of this raw material, with 9.39 million tons imported in 2024. Obviously, this figure could double in the future. Currently, imports provide about 25% of the demand for this resource. Domestic scrap collection amounts to about 25 million tons.