Will India’s recycling sector collapse under the GST regime?

• New GST rates on scrap materials have lessened recyclers’ margins
• Rag pickers are the hardest hit, as their meager earnings will go down further
• Lower margins on recycling could lead to more unrecycled waste piling up

Environmentalists have warned that the new Goods and Services Tax (GST) that imposes higher rates on scrap material than before may be a major setback for India’s recycling sector.

Before GST, there was no tax on scrap material except on e-waste and metals (6% Value Added Tax). Under the new GST regime, all categories of scrap now have a high tax rate of mostly 18%.

Scrap-sellers complain that their work has reduced because the waste generators are now getting lesser rates for their recyclable waste.

Inclusive climate action is more effective

The large scale scrap dealer is now is buying scrap at lower prices and in turn, the mid and small level dealers are also buying it at lesser prices – thus reducing the rates rag pickers get. Also, big waste dealers may lay off their employees to cut costs.

A 2009 study by Chintan found that Delhi’s recycling efforts saved 3.6 times more emissions than any project receiving carbon credits in India at the time. India’s fight against emissions has to be an inclusive one if it must be effective, experts say.

Women, Children worst hit

Women waste pickers are paid less money, and with prices falling they will be further marginalised. A decline in the adults’ incomes will impact children as well. A 2013 study showed that 63% of the children of an impacted site dropped out of school when their parents were unable to access waste.

GST impact on the environment

Experts are worried that GST rates will lead to more waste piling up in our landfills now as recycling activities may fall. The customer/waste generator and the informal sector will see no economic benefit in it. They recommend rolling back of GST levied on scraps of plastic, paper, cardboard and glass.

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