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Recycle industry at verge of bankruptcy as shipments stuck at ports, charges build up

Once-booming material recycling industry has come to a standstill after the lockdown, bringing thousands of traders to the brink of bankruptcy as they face mounting levies from shipping liners and freight stations for stuck containers

PTI PTI
New Delhi Published on: May 11, 2020 22:24 IST
Recycle industry at verge of bankruptcy as shipments stuck at ports, charges build up
Image Source : PTI (FILE)

Recycle industry at verge of bankruptcy as shipments stuck at ports, charges build up (Representative image)

Once-booming material recycling industry has come to a standstill after the lockdown, bringing thousands of traders to the brink of bankruptcy as they face mounting levies from shipping liners and freight stations for stuck containers despite the government giving waivers, an industry body said.

Around 2.5 lakh containers containing imported scrap are lying at various ports of the country waiting for clearances ever since the lockdown began, says material recycle producers body MRAI.

The industry that gives direct and indirect employment to 25 lakh people, is staring at a huge financial crisis with dimming hopes of a revival from coronavirus-induced lockdown, it said.

A Gujarat-based trader who did not wish to be named said around 100 containers of scrap metal imported by him are lying at Gujarat's Mundra Port for want of clearances due to the lockdown imposed to contain the new coronavirus infection.

"My scrap imported from Europe and Singapore is worth about Rs 5 crore and with duties, it comes to Rs 6 crore.

"Now I have been slapped with demands worth Rs 5 lakh per day as charges from the container freight station (CFS) and shipping lines besides lakhs of rupees pertaining to other charges for flouting norms...The situation is such that I along with others are at the brink of bankruptcy," he told PTI over the phone.

About 20 workers and their families dependent on him are staring at starvation, he said.

Sanjay Mehta, the President of Material Recycling Association of India (MRAI), told PTI that about 10,000 recycling units in the country sustaining the livelihood of 25 lakh people directly or indirectly are at the verge of closure despite relief measures announced by the government.

The government issued an order for the waiver of rent and other charges but shipping lines and container freight stations (CFS) are openly flouting the order, Mehta alleged.

He cautioned that if the government failed to take immediate steps this would result in huge NPAs to banks.

Around 25 lakh people are dependent on the recycling industry based on paper, steel, aluminium, copper, brass, zinc and lead imported as scrap, Mehta said.

"About 2.5 lakh containers are lying at India's ports for clearances...In the extraordinary situation, delays are happening in procuring papers from banks, courier and other formalities but the shipping lines and CFS have refused to waive levies despite clear-cut orders from the Ministry of Finance and the Ministry of Shipping.

"The government orders are being flouted and huge levies are being charged but everyone has turned a blind eye to our problems."

MRAI represents recycling material producers of metal and paper in the country. While the CFS is governed by the Ministry of Finance, ICDs are governed by the Ministry of Shipping.

Mehta said that the body has been continuously demanding the government's intervention ever since the lockdown was announced, and India's 10,000 MSMEs dependent on scrap will die if no relief would be announced.

"The situation has worsened now...importers and traders had made full payment to the suppliers in the UK, the US, Australia, Singapore etc as there was no ban on shipments...But here the government is not able to get its orders implemented about waiver of charges," he said.

According to a letter from Commissioner of Customs (General) to Container Freight Station asking them to strictly implement Shipping Ministry order for a waiver of charges, rent etc, about 33,000 containers are lying at Jawahar Lal Nehru Port Trust only.

Industry body FICCI also sought Shipping Ministry's attention towards non-compliance of official orders by shipping lines and port terminals for waiving charges but to no avail.

"If these orders are not strictly implemented by CFSs, then it is estimated, that this might lead to NPA of Rs 2 lakh crore and a direct job loss of 20 lakh low-strata people working in recycling and secondary sectors," the MRAI has said in a letter to the government.

Noting a drop in export-import (EXIM) cargo due to supply chain disruptions on account of the COVID-19 pandemic, the government last month asked

India's all 12 major ports to defer the lease rentals and licence fees-related charges for April, May and June besides waiving rentals in proportion to the cargo drop and not to levy penalties.

In a letter, the shipping ministry asked the ports to provide relief in the form of exemptions/ remission of charges to the shipping liners, exporters, importers, logistics providers and other stakeholders hit by the coronavirus outbreak.

The MRAI also said if no intervention is made Indian importers will lose "more than Rs 80,000 crore in detention/demurrage charges to the lines which are foreign entities."

Queries sent to Jawaharlal Nehru Port Trust (JNPT) Chairman Sanjay Sethi and Mumbai Port Chairman Sanjay Bhatia remained unanswered.
JNPT is India’s largest container port, handling more than half of the container cargo across all major ports in India.

Queries sent to Shipping Ministry officials too remained unanswered.

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