Scrap Business in India - Legal Gyan

Dheeraj Budhori
August 14, 2022
Scrap business in india

What is scrap business

Scrap business is mainly about buying and selling of Stainless Steel, Aluminium, Copper, Brass, Alloy Steel and Iron. The scrap business is a very profitable business in India .It is also called as waste to wealth business. The scrap business does not require any big investment, it can be done with a small amount of money, you can start your scrap business by collecting the scrap metals from the junkyards or local shops and sell them to the recycling companies. The scrap business is good for the environment because it is reducing landfill sites and helping with recycling. Scrap metal is also recycled into new products or used as a fuel source. Scrap iron and scrap steel are processed for re-use in manufacturing plants around the world.

What is scrap

Scrap Definition & Meaning:
Scrap (or waste) has a number of definitions in relation to the recycling industry. It can refer to any unwanted material, or anything that is considered to be rubbish. Waste is generally an unwanted substance that is thrown away, but can also be re-used for other purposes. In the recycling industry, scrap is a term used to describe a material that has value as a raw material and can be sold for use in manufacturing. There are different types of scrap materials:
  • Scrap Metal - Iron, steel, aluminum, brass and copper (copper cable), etc
  • Plastics - PET bottle, HDPE, LDPE, PP/PS plastic scrap
  • Ferrous & Non-ferrous Metals - aluminium, copper, brass alloys.
  • Rubber - Industrial rubber from vehicle tyres and machinery parts
  • Paper & Cardboard - Old magazines, newspapers and cardboard boxes are examples of paper scrap. The cartons used for food products such as yoghurt and the cartons for soft drinks are made from paper.
  • Wood & Timber - Used wooden pallets and boxes etc

Scrap buyers

Scrap buyers are people who buy materials that would otherwise be thrown away and recycle them into new products. For example, a scrap buyer might purchase old cars from individuals and sell the steel to a company that uses it to make a variety of products, such as appliances, automobile parts and medical equipment. Scrap buyers are commonly seen in scrap yards, where they buy scrap metal from individuals and businesses.

Scrap collection

Scrap collection is the process of recycling scrap metals. Scrap can be collected from a wide range of industries including manufacturing, automotive, construction and demolition waste. Scrap collectors sort both ferrous and non-ferrous metals, such as steel and aluminum, from other types of waste materials so that the scrap can be reused.

Scrap dealer

A scrap dealer is any person or company that purchases recyclable materials from others for resale and also scrap dealers are the middlemen between a consumer and the recycling center. 

Scrap industry in india

Scrap industry in india is a huge industry. Nowadays the scrap industry is booming in the sky. Scrap industry in India is also known as secondary industry. In this industry primary materials are being recycled or reused so that they can be used again and again without affecting the overall demand in market. The scrap industry contributes substantially to the growth of the economy in terms of employment and production output. Also the scrap metal industry plays a vital role in the global economy by offsetting the demand for raw materials from mines and reducing the need for "green" products produced from virgin raw material. India is a leading country in the world for the production of scrap. It is also a major exporter of scrap to many foreign nations like europe, China, Japan and North America. Scrap generally refers to waste materials generated from productive activities. Scrap industries deal with waste products by transforming them into raw materials for reuse in production processes. It is an important source of raw material for the manufacturing industry as well as construction industry. Tons of scrap are generated every year in India, which include all types of metals, paper, plastic and rubber scraps. Many of these are recovered and recycled by various scrap industries. The Indian scrap market comprises mainly ferrous and non-ferrous metal scraps which are re-melted and re-rolled to generate new products. Let's talk about the type of scraps.

Types of scrap

There are two different types of scrap: ferrous and non-ferrous. Ferrous scrap consists of steel, iron, and other related materials, while non-ferrous scrap consists of aluminum, copper, lead and other related materials.

How to start scrap business in india

Scrap business is one of the oldest and largest industries in India. There are many places in India where you can collect scrap and sell it to scrap dealers. You can start a business by buying scrap from local people and sell it to the scrap dealer. You can even buy entire cars and sell their parts as scrap. The best place for scrap business is in Mumbai, Pune, Nagpur, Delhi, Noida, Hyderabad etc. If you want to start a new business without any Big investment this is the best opportunity for you. One of the most important things in starting a new business is finding out where to find the stock. Scrap business is a great option for you if you have a lot of spare time. You don't have to have a very big storage space or any machinery. The only thing that you need is to have a little knowledge of the current market prices.
Here are steps of how to start scrap business in india:
  • There are different ways of doing scrap business in India, but the best way is to collect things from households, offices, construction sites etc., which can be recycled and are reusable.
  • You will need some basic equipment like a pick-up van, magnetic crane & tow rope, materials handling equipment (forklift or front loader), jacks/ hoists, scales and other tools required for work like screw.
  • You need to take noc and permission from government authorities and central pollution control board or state pollution control board. you also need to register yourself as a dealer, collector, Recycler, or trader.
  • Industrial land for your business.

Which licenses are required to start a scrap business in India?

A license is required if the scrap metal dealer, trader or Recycler wants to run his business legally in India. The license for scrap metal business in India can be obtained from the local authorities, who are authorized for it.
The following list shows some of the licenses you may need for your scrap metal business:
Business license
  • Business Tax Registration Number(GST)
  • Central or State Pollution Control Board NOC
  • Scrap Metal Traders License For trading
  • Trade permit or industrial license
  • Import license: If you want to import any machinery or material for your scrap business, you need an import license from the government authority.
  • Export license: If you want to export scrap after processing, you need an export license.

Scrap Business Ideas with Low Investment

Cheap business ideas are nothing more than a myth. To be successful, the idea must make money. Before you decide to scrap an idea, make sure you really looked into it thoroughly. A good scrap business idea comes from your own needs and interests. If you find yourself doing something repeatedly and would like to save time or money, chances are many others do too.
Here is a list of scrap business ideas which do not require high investments and can be started easily:
  • Scrap Metal Business
  • Scrap Cars Business
  • Construction Waste Disposal Business
  • Paper Waste Disposal Business
  • Plastic Bottle Making or Recycling Business
  • Business of Cleaning Waste or Trash from Landfill Site
  • Recycling of Used Tyres
  • Battery recycling
  • E-Waste recycling business
  • Medical waste recycling

Scrap business profit margin

The Scrap business profit margin depends on how much effort you want to put into it and how quickly you can find buyers for your metal scraps. When it comes to scrap business profit margin, the first thing a lot of people think is to make money. That's certainly true, but there are other factors that can lead to having a good scrap business profit margin as well. The profit margin in scrap business is usually 30% to 50%. It can be higher depending on the quality or grade of Scrap. The profit margin of the scrap iron business depends on the market price of iron, copper and other metals at the time. It can change due to the demand and supply of metals in the market.

Benefits of Scrap Business

  • Reduces the amount of waste in landfills
  • Reuses materials that would have otherwise been thrown away
  • Creates jobs for people in the scrapping industry
  • Saves money for people who use scrap metal for their projects.

Biggest scrap market in india

Being the biggest scrap market of Asia, the Mayapuri Scrap Market is an important hub for recycling and recycling industries in India. It's generally referred to as the "Mayapuri Junk Market". The largest scrap market "Mayapuri" in the world is situated in Delhi. It is a sprawling, formidable and highly efficient market, where mountains of waste iron, steel and aluminium are traded daily. Tons of scrap metal are brought here everyday by truck. The scrap market generates thousands of jobs in the city. This unorganized sector of the economy is extremely competitive and lucrative.

Scrap rate in India

Scrap metal rates depend upon the type of metal being sold as scrap, for example copper wire is more expensive than iron sheet. Scrap rate varies according to the material grade. The main two types of scrap iron pricing are:
  1. Buyer pays for the removal; and
  2. Seller pays for the removal.
The scrap metal values are influenced by several factors:
  • National as well as international demand and supply of scrap materials.
  • The type of product – ferrous, non-ferrous or a combination of both
  • Various grades of scrap metal can be separated at our facility e.g. copper wire & cable, copper pipe, copper tube etc. (where applicable)
  • The weight/size of product
Those factors vary from country to country so it is hard to predict what the scrap iron price will be in future. But usually scrap dealers can give you a good idea about that.

What is the GST Rate on Iron and Steel?

The GST Rate on iron and steel is 18%.

See Also- 
Check out my new E-Book on Business Ideas from Waste Material: In this eBook I have shared 10 Business Ideas by which you can make money from the stuff (waste) that people usually throw away, so   share these ideas with your family & friends and contribute to the environment.