The Directorate General of Foreign Trade (DGFT) is weighing changes to India's scrap import inspection rules following representations from recycling industry bodies. According to Reuters, the DGFT stated that no decision has been taken to discontinue the pre-shipment inspection requirement but is considering the representation from the Material Recycling Association of India (MRAI). The trade regulator is evaluating the shortage of authorised overseas agencies as a key concern for India, which imports 13 million metric tons of recyclable metal scrap annually from more than 160 countries, with 2,500 containers arriving each day. In many source countries, either no authorised inspection agency is available or inspection depends on a single agency, as cited in the MRAI's September 19 petition to the DGFT.
The regulatory changes have introduced stricter documentation requirements for PSIAs. According to Business Standard, on August 25, DGFT issued a trade notice making it mandatory for PSIAs to generate and issue PSICs on the same day of inspection. After receiving feedback from trade and industry, DGFT subsequently eased the timeline, allowing PSIAs two days from the date of inspection to generate and issue PSICs. It also provided a one-time seven-day window for recognised PSIAs to clear the backlog of certificates relating to inspections conducted before August 25. The DGFT has defended its position, stating that together with the easing of the issuance timeline to two days, this has substantially addressed the transitional concerns raised by trade. However, industry executives note that the two-day window creates problems when cargo is already in transit and PSIAs fail to generate the certificate within the stipulated period.
Metal scrap importers are facing significant operational difficulties due to the regulatory changes. As reported by Business Standard, a listed metal recycling company recently had eight cargoes released at Mundra port after paying penalties and getting the consignments inspected by local agencies, as PSICs issued by agencies whose recognition was subsequently withdrawn were not accepted for customs clearance. The company incurred penalties on seven other cargoes at Mundra where PSIAs failed to upload the PSICs within the newly prescribed two-day window. According to an executive at the listed metal recycling company, when an agency's licence was cancelled by DGFT, the DGFT said that the certificate generated by them is not valid, and the DGFT did not accept the uploaded documents by these cancelled agencies. The company had to pay penalties on seven such cargoes despite the cargo having been inspected by the agencies, highlighting the operational challenges created by the regulatory transition.
The Material Recycling Association of India (MRAI) has proposed alternative safeguard mechanisms while acknowledging the complementary nature of current inspection systems. According to Reuters, the MRAI emphasized that pre-shipment inspection and destination port screening serve different purposes and are not interchangeable. The trade body noted that pre-shipment inspection is a "source-side safeguard," that can detect non-compliant consignments such as radioactive material, arms, ammunition or explosives, before they are shipped. In contrast, letting any unchecked cargo dock at Indian ports may pose a risk, with the MRAI stating that "The two checks are complementary, not substitutable." The MRAI is working to extend recognition to more pre-shipment inspection agencies globally to tackle the supply gap and also to expand the list of safe countries or regions whose consignments are deemed not to need inspection. Dhawal Shah, Senior Vice President of MRAI, estimated that port-based verification could potentially save around $500,000 in foreign exchange every day, with India having 18 major seaports, out of which 15 have the most modern infrastructure in terms of radiation scanners available.
The DGFT is actively working to address the shortage of authorised overseas agencies while maintaining the current inspection framework. According to Reuters, the DGFT stated that it is open to further easing compliance and is weighing the representation from the recyclers' body. The trade ministry body is working to expand the list of Safe Countries/Regions, thereby reducing reliance on PSIAs and facilitating trade from low-risk sources, with the safe country network expansion expected to progressively ease reliance on the PSIC framework. The DGFT has also stated that efforts are underway to expand the list of Safe Countries/Regions, with the safe country network expansion expected to progressively ease reliance on the PSIC framework, while maintaining that no decision has been taken to discontinue the pre-shipment inspection requirement.
