How to Start Scrap Business in India: Step-by-Step Guide

Business ideas involving scrap may seem unconventional at the start, but they certainly have the potential to earn high profits. The Indian aluminium scrap market alone stands at over ₹31,160 crores and is poised to grow to ₹91,840 crores by 2034. As the demand is growing, more and more aspiring entrepreneurs are seeking to explore profitable scrap businesses in India. If you're looking to tap into the potential of scrap, this blog covers everything on how to start scrap business in India.

What is a Scrap Business?

A scrap business refers to a type of business that deals with buying waste materials, like metal, plastic, paper, electronics, glass, or rubber, and selling them. Businesses often sell this scrap to local scrap dealers, recycling plants, or manufacturing companies, which repurpose the scrap.

These materials are then reused, melted down, or converted into something new. The key benefit of starting a scrap business is that it is profitable, and you don't need a big office space or sophisticated equipment to get started.

Overview of the Scrap Business Market in India

India is the 2nd biggest steel producer in the world after China. Despite this, India has imported over 11.7 million tonnes of steel scrap in 2023, predicted to reach 30 million tonnes by 2030. The scrap metal recycling market, on the other hand, is currently valued at ₹1.14 lakh crore and expected to grow to ₹1.92 lakh crore.

These numbers show that there is a consistently growing demand for scrap in India. This demand is not just driving scrap businesses towards profits but is also encouraging responsible behaviour for a cleaner environment. For business owners, the transition to a sustainable future has created a wealth of choices to pursue different scrap business ideas.

Why Should You Start a Scrap Business in India?

Here are some reasons why you should start a scrap business in India in 2025:

• Low Investment & Good Returns: As the demand for scrap is increasing in India, businesses are offering good returns. Unlike other businesses, you don't need substantial capital to start a scrap business in India.
• High Demand for Recycled Products: Industries are using reused materials more and more to save money and become environmentally friendly. This is further driving demand and also increasing sales.
• No Special Training Needed: You don't need any special degree or certification to start a scrap business.
• Government Incentive for Waste Management: The Government of India is encouraging the recycling of waste through its Swachh Bharat programme. That translates to greater prospects for small scrap dealers.

 

Types of Scrap You Can Trade

You have to plan what type of scrap you will be working with before you begin. These are the most common types of scrap material in India:

1. Metal Scrap

It includes ferrous metals such as steel and iron, and non-ferrous metals such as aluminium and copper. It is found by dismantling old cars, industrial waste, and building waste. Recycling of metals saves energy, conserves resources, and can be used to make new products such as steel beams and appliances.

2. Electronic Waste (E-waste)

E-waste includes computers, phones, and TVs, which have valuable metals like copper. Recycling e-waste helps recover these metals safely. As the amount of electronic consumption increases, recycling of e-waste is crucial in terms of resource recovery and environmental conservation.

3. Plastic Scrap

Used containers, films, and industrial offcuts are covered with plastic scrap. Recycling of plastic not only minimises pollution but also saves resources like water bodies and animal habitats.

4. Paper and Cardboard Wastes

Paper waste consists of newspapers, office paper, and packaging. Recycling this waste reduces emissions and helps conserve trees, water, and energy. Businesses use recycled paper and cardboard to make new products.

5. Automobile Scrap

Automobile scrap includes old or worn-out vehicles and their components, such as metals, plastics, batteries, and tyres. It holds the most significant contribution to the recycling of steel and aluminium.

6. Glass Scrap

Glass scrap is made up of broken glass bottles, containers, and more. Recycling glass helps save the consumption of raw materials and energy. The glass that has been recycled is melted again to form new products.

7. Rubber Scrap

Used tyres and industrial rubber pieces are the main components of rubber scrap. Recycling the rubber scrap minimises the environmental damage of long-term waste. This recycled rubber is then used in mats, playground surfaces, as well as automotive parts.

Category	Common Examples	Typical Sources
Ferrous Metals	Steel, iron, cast iron, rails	Construction, ship breaking
Non-Ferrous Metals	Aluminium, copper, brass, lead, zinc	Wires, cans, batteries, electrical goods
Stainless/Alloy	Stainless steel, nickel alloys	Appliances, medical equipment
E-Scrap	CPUs, wires, boards, monitors	Obsolete electronics
Wood & Furniture	Old furniture, ply, doors	Home/office refurbishment
Plastic	Bottles, films, containers	Packaging, home, industry
Paper/Cardboard	Packaging, documents	Offices, retail, industries
Battery Scrap	Lead-acid batteries, NiCd batteries	Automotive, industrial use

 

Step-by-Step Guide to Start a Scrap Business in India

If you want to start a scrap business in India, here's how you can do it systematically and efficiently:

1. Analyse Local and National Market

You must first start by analysing the local and national scrap market. It helps you understand the demand and supply and then create a robust business plan based on the research. It also gives you insights into:

• Major buyers or recycling centres
• Top competitors in this business
• Rates available for different types of scrap

2. Select a Niche or Category

You must now select the types of scrap you want to deal in. While the business doesn't require any training or education, some categories do require special handling. Different categories also have different demands. For instance, metal and plastic scraps are easily obtainable and simple to sell. This is why you must select a category that is always in demand and generates more profits.

3. Choose a Business Model

You must then proceed to select a business model for your scrap venture.

• Under the collection and aggregation model, scrap is collected from residences, workplaces, and retail stores, sorted, and then sold to large recyclers.
• Scrap yards create a place where buyers and sellers may go directly to each other.
• Invest in machinery for shredding plastic or melting metal to clean, melt, or crush scrap for later sale.

4. Get the Required Licenses and Registration

Even a small scrap business needs to follow legal rules. Here are the licenses and registrations you will need to operate the business legally:

• Udyam (MSME) Registration: Register your business as a micro-enterprise. This helps with loans and government support.
• GST Registration: If your yearly turnover exceeds ₹20 lakh (₹10 lakh in some states), you'll need a GST number.
• Trade License: It is issued by your local municipality or panchayat.
• Pollution Control Board Clearance: You will need the clearance if you deal with e-waste or toxic waste.

5. Find a Good Location

To sift, disassemble, and store scrap, you'll need enough room. The kind and quantity of scrap to be collected will determine the location's infrastructure and size. You can begin from home or rent or lease a scrap shop. Additionally, make sure the area is secure and convenient for big vehicles to reach.

 

6. Buy Basic Tools and Equipment

You must buy some basic tools and equipment, including:

• Weighing Machine: A Digital scale for buying and selling.
• Cutters and Gloves: For cutting or working with sharp metal/plastic.
• Trolleys or Hand Carts: These are used to move scrap around the site.
• Packaging Materials: Bags, ropes, and ties for bundling.

7. Hire 2–3 Workers

Scrap handling is labour-intensive work. This is why you need workers who not only help you gather scrap but also sort it. They will also help you with loading, unloading, weighing, sorting, and delivering material.

8. Establish a Buying Network

You need a constant supply of scrap to operate your business. The following are some places from where you can source scrap:

• Households and Apartments: Initiate door-to-door collection using pickup centers.
• Small Businesses: Offices, stores, hotels, and workshops discard usable scrap.
• Manufacturing Units: They primarily sell bulk metal or plastic scrap.
• Construction Sites: Source of metal, wood, and cement waste material.
• Old Electronic Dealers: Collaborate with mobile or computer repair shops for e-waste.

To build trust, always give the customers and sellers a fair price and be honest when weighing scrap or other things.

9. Find Buyers or Recyclers

After you collect your scrap, you will also need to sell it. These are the typical buyers:

• Recycling Plants
• Metal Furnaces or Foundries
• Plastic Recyclers
• Paper Mills
• E-Waste Companies

You can also find them on websites like IndiaMART or JustDial. Or search in your area on Google with keywords like "metal scrap buyer near me."

10. Set Reasonable Prices and Keep Records

Scrap values fluctuate daily, particularly for metals. Monitor local dealer prices and online websites. Avoid lowering your prices to attract customers. Instead, provide good service, accurate weights, and clean packaging. This will help you grow your business and have a higher retention rate of customers. You must also keep a record of the following:

• Daily purchases and sales
• Weight and price of materials
• Buyer/seller names
• Transport or labour charges

Cost of Starting a Scrap Business in India

Here is how much it will cost you to set up a scrap business in India:

Expense Category	Estimated Cost (₹)
Machinery (optional)	₹2,00,000 – ₹10,00,000
Business Registration & Licenses	₹25,000 - ₹50,000
Basic Tools & Setup	₹50,000 – ₹1,00,000
Land/Space Lease (500–1000 sq. ft)	₹15,000 – ₹40,000/month
Initial Scrap Procurement	₹50,000 – ₹2,00,000
Labour (2–3 people)	₹30,000 – ₹45,000/month
Transportation (Used Tempo or Rental)	₹1,00,000 – ₹3,00,000
Miscellaneous (branding, admin, electricity)	₹20,000 – ₹50,000

 

Risks and Challenges of Starting a Scrap Business in India in 2025

Like every business has its own set of challenges, the scrap business isn't immune either. Here are some of the most common challenges you'll face when starting a scrap business in India:

• Price Volatility: Scrap prices fluctuate all the time and can reduce your profits.
• Unsold Stock: Based on the fluctuating demand, you will have to hold onto some categories of scrap for longer than necessary.
• Fuel and Tempo Charges: Transport costs eat into your profits if you do not manage them effectively.

How Business Loan Helps You Expand Your Scrap Business?

Poonawalla Fincorp offers low-interest business loans to help you expand your business. With a loan amount of up to ₹75 lakh, you can expand your business without facing a cash crunch. Here is how our business loan for the scrap business helps you expand it:

• You can purchase or upgrade machinery such as shredders and balers.
• Maintain a sufficient level of working capital so that you can buy scrap in large quantities and settle your supplier payments on time.
• The loan can be utilised to rent out or buy additional space to store or sort, or even open new branches as your business expands.
• You can use the loan to purchase digital tools and software to make inventory and sales management more effective.

To Conclude

Scrap businesses in India offer a comparatively easier but profitable entry into entrepreneurship. You don't need a fancy degree or a huge investment to start it. One thing that makes this business truly rewarding, besides its growth potential, is that you will also be helping the environment by reducing pollution, saving energy, and promoting recycling. However, expanding a business and developing it come with hefty costs. This is where a Business Loan from Poonawalla Fincorp can be your financial partner in business.

Apply for a Business Loan from Poonawalla Fincorp and take your business to new heights today!

 

Frequently Asked Questions

1. Do I need GST registration even if I’m only selling scrap to local dealers?

No. However, you do need GST registration if your annual turnover crosses ₹20 lakh (₹10 lakh in some states).

2. Where can I check current scrap rates for metals like copper or aluminium?

You can track daily rates on platforms like IndiaMART, ScrapRegister, or by checking with local wholesalers.

3. Can I start a scrap business from my home if I don’t have land?

You can begin small with a rented godown or store material in a backyard, but follow local zoning laws to avoid penalties.

4. Is e-waste more profitable than metal or plastic scrap?

Yes, but it requires special handling, licensing, and connections with certified recyclers due to its toxic components.

5. How do I avoid being cheated on scrap weights or prices?

• Use a digital weighing scale, double-check weights, and always stay updated on market rates to avoid underquoting.

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