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Muskaan Verma
| Updated: 17 Jun, 2022 | Category: Waste management

How to start a Metal Scrap Trading business?

Metal Scrap Trading business

Harmful waste, whether it is plastic waste, metal waste, E-Waste, or Solid waste, is increasing day by day in India, reaching up to 62 million tonnes of waste each year, with Delhi topping the list with 30.6 lakh tonnes of which 42 million, about 70% are collected, among which 12 mil tonnes are treated, and 31 mil tonnes are dumped in landfill sites.

With this much waste production, it is important for India to promote and authorize more waste management businesses like Metal Scrap Trading Business which is not only important for the environment to control and manage the mounting amount of metal scraps in India but also important for developing and growing the market of India.

Metal Scrap Trading Business

Scrap is defined in the Industrial sector as the material, either metal or other substance that cannot be repurposed. Metal Scrap trading Business transaction of scrap metal at a low price for the purpose of management and recycling into the sellable product, with the steel and Aluminium being the most recycled metal. This business is one of the most commercially successful industries which require a minimum initial investment.

The process used in the Metal scrap Trading Business involves gathering and collecting metal scrap that is declared waste. After collection of “worthless metal,” they are melted down and turned into raw material. Metals in this business are melted and moulded into a new product, which is then sold to recyclers at a low price. There are many advantages of the scrap trading business, including: –

  • Less Energy Consumption
  • Fewer Emissions
  • Environment sound

The mental scrap trading business is worth over 500 billion dollars globally among, with only 11 billion dollars, that is India contributes 2.2%. In 2013-2014, 26.9 million tonnes of steel were generated out of scraps in India. It is also estimated that the scrap market will increase up to 13% in India. Apart from this, the profit margin of the scrap business is estimated to be 70% which may increase to 100%.

Most Common metals used in Metal Scrap Trading Business

While establishing Metal Scrap Trading Business, business owners have to first check the ferromagnetism of the metal. Some of the most commonly used metals are: –

  1. Iron and alloy, and steel which has a wide range of application
  2. Copper is another most used scrap which is non-ferromagnetic and weighs more than iron.
  3. Aluminium is less valuable and is a lighter metal.
  4. Lead which is a soft and heavy metal used commonly in bullets
  5. Bronze which is a copper alloy which is less valuable and is lighter weight.

Pre-requirement for setting up Metal Scrap trading business

There are many important things to consider before setting up a Metal Scrap Trading business: –

  1. Choosing which scraps to collect.
  2. Choosing an appropriate location for the business centre.
  3. The chosen location should be easily accessible by public transit.
  4. Repurposing discarded materials into raw resources.
  5. Creating new products from scratch.
  6. Market Sales of newly-produced goods

Process of Setting up metal scrap trading business

First, the owner has to register the units as per the registration process of different categories of the organization, and Manufacturers must comply with the following regulations in order to register a company under the Companies Act, 2013, Partnership Act, 1932, or LLP Act, 2008, for which the business owner must get registration.;

  • Financial Disclosure
  • Appointing top officials
  • Management
  • Drafting agreement with the third party
  • Annual filing of return

Suppose the owner is setting up a factory. In that case, he/she needs to acquire a Factory license, which is permitted by the Chief Inspector of Labour Commissioner Organisation after the inspection of the unit as stipulated under Factories ACT, 1948. Furthermore, after the license is granted Manufacturer is required to provide production understating.

  • After this Manufacturer is also required to acquire the Certificate of Consent which is of two different categories given at two stages, The Certificate of Consent is obtained in two parts Consent to establish (Under the Water (Prevention and Control of Pollution) Act, 1974 and Air (Prevention and Control of Pollution) Act, 1981[1], manufacturers are required to acquire the Consent to Establish before the establishment of the Industry) and Consent to operate (Consent to operate is issued by the State Pollution Control Board once the Industry is established and is ready to operate after acquiring Consent to establish).
  • After applying for a Certificate of Consent, the Manufacturer is also required to apply for a GST number which is acquired from GSTIN from the official government site. 
  • The owner is also required to register under a Digital signature certificate that will permit the truck to run freely across the different states. 
  • MSME (medium-small and micro-enterprise) is also required to register the unit/plant as an enterprise. 
  • Lastly, registration from the government department is also needed so that scrap transactions can happen freely. 
  • Apart from this, permits from the Local municipal area are required to start a metal scrap trading business. 

Documents required for Consent to establish

  • Site plan with photos depicting the distance between the proposed site and the nearest residential area and water body (applicable for Orange and Red categories).
  • SSI Certificate of Partners/Directors, Industry Department Certificate
  • Vents/ Stacks/ Chimney and emission sites with Nos. The layout plan shows the drainage/pipeline and final disposal point for liquid effluent.
  • Collection, storage, and disposal of solid waste
  • Total available open land in the industrial complex for Green Belt Development, landscaping, and other purposes
  • A qualified person drew building blueprints with machinery details.
  • Total constructed area
  • The project report includes production process information, process flow diagram, chemical formulas, and emission, effluent, and hazards/solid waste sources.
  • Water usage breakdown and water balance
  • Effluent / Sewage Treatment Plant Specifications and Flow Diagram
  • Boiler type, fuel used, and quantity
  • Specifics on air pollution controls
  • DG Specifications
  • Raw material list with daily MTD/monthly quantity
  • Product/by-product list with daily MTD/monthly quantity
  • In the case of chemical industries, a Material Safety Data Sheet is required.
  • Permission from the state’s groundwater authority.
  • Common Biomedical Waste Treatment Facility Membership Letter (for healthcare facilities, Pharmaceutical units).

Documents required under Consent to Operate

  1. Electricity Bill
  2. Proof of ownership
  3. Water Bill
  4. Pan Card and the Aadhar Card
  5. Municipality or Industry license
  6. Health Trade License
  7. Site Plan
  8. CA Letter on the total cost of the project
  9. FSSAI Certificate (for food-related business)
  10. GST certificate
  11. Environmental Statement (form-V)
  12. Authorization Letter
  13. Factory/Trade License
  14. Proof of Registration of unit

Apart from these documents, the Manufacturer also has to show Consent to establish, Manufacturing process Layout plan and solid waste effluent, hazardous waste and fuel gases latest analysis report.

Conclusion

When establishing a metal scrap trading business, any business owner has to keep in mind the basic requirements of the listed documents and process. So as to keep the government authorities up to date and aware of the activities taking place in the business, this also helps the manufacturers take advantage of the new initiatives that the government comes up with to help businesses involved in businesses helping environmental protection and waste management.  

Read our Article:CPCB certification For Compostable Plastic Sellers

Muskaan Verma

Muskaan has completed her BA.LLB and LLM, gaining vast legal knowledge and expertise. She has keen interest in legal research and content writing, having prior experience of publishing numerous research papers in international journals on Environmental Laws and Corporate Laws.

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