c. On why the dealer is tempted to sell battery scrap to the trader rather than the manufacturer, AIBMA has provided the following information.

	If he gave to company	If he gave to trader
Dealer buys back scrap From  customer at	106	106
Price he gets from company	135	160-190
Margin on scrap	29	54-84
Income Tax @ 30% (say)	9	-
Net margin	20	54-84

Thus the dealer has the potential to make a much higher level of profit by selling collected batteries to the trader.

d. The re-conditioner/ assembler, in addition to the lead content of batteries, is able to make use of the hard rubber container, negative plates, seperators, etc and is therefore at an advantage vis-a vis the organised sector. Further, AIBMA has provided the following details to show the other cost advantages of the informal sector.

	Organised Sector (6 nos.)	Small Scale (50 nos.)	Re-builder / Re-cond. (thousands)
Consumer pays	100	80	60
Sales Tax	(11)	(9)	-
Distribution costs (dealer margins etc.)	(20)	(10)	-
Excise duty (16%)	(10)	(5) (concessional)	-
Realisation of Manufacturer	59	56	60

Thus a re-builder can afford to sell the product 40% cheaper and still realise the same amount as that of the organised sector.

e. In fact, it is the attraction of the dealer to sell collected used batteries to the trader and the cost advantages of the assembler/re-conditioner vis-a vis the organised sector that would pose formidable challenges in implementing the Batteries Legislation. However, the proposals on the anvil to set up new smelting capacity in the organised sector clearly points to the expectation of the organised sector to be able to procure adequate raw material in the form of battery scrap.

f. While it is true that international battery scrap prices are much lower than domestic prices, it has been understood that in planning new secondary smelting capacity, competition from imports of lead metal has also been carefully considered. However, given the enormous price differential between domestic scrap price (around $ 250/MT) and international scrap price (around $ 150/MT) and further considering that secondary lead production accounts for nearly 60 % of total lead production globally, the price distortions and consequent implications for competitiveness of lead based products, batteries in particular, are very clear.

4.    Impact of Batteries Legislation on Supply-Demand

1. It is recognized that the re-conditioners cater to a definite segment of the replacement demand. While the new Batteries Legislation would reduce scrap availability for backyard smelting (from where re-conditioners were sourcing their lead) the re-conditioners would continue to play a role in the replacement market and meet the market demand for re-conditioned batteries.


2. The role of traders in channelisation of battery scrap would go down over a period of time with stricter enforcement. The responsibility of the dealer under the Batteries Legislation to return collected battery scrap either to the authorised re-cycler or manufacturer coupled with action against defaulting dealers would eliminate the trader in course of time as collection of used batteries is to be stepped from a level of 50% in the first year to that of 90% from the third year onwards. The details of projected increase in availability of scrap for the organised sector secondary smelters would be presented in the workshop.


3. Enforcement would hold the key to success of the new legislation. The State Pollution Control Boards are to keep track of flow of lead in the economy from the periodical reports to be submitted by the manufacturers, dealers and re-cyclers in order prevent flow of lead to the backyard smelters. Creation of further secondary smelting capacity in the organised sector would be critically dependent on assured availability of battery scrap. With increased secondary smelting capacity in the organised sector and taking into account the enormous difference in lead recovery in backyard smelting (30 %-40 %) and the organised sector (around 90 %), secondary lead production in the country could be expected to play a greater role in bridging the demand-supply gap in times to come.

5.    Way Forward

The serious distortions in price of battery scrap across nations brought about by the Basel Ban Amendment poses a formidable challenge to rapidly industrializing countries. The challenge has to be faced without compromising human health and environment. The strategy proposed by Global Environment & Technology Foundation to implement ESM for metal recyclables under the Basel convention by developing a new ISO 14000 series and making compliance with the new ISO series and relevant national legislation a perquisite for recycling facilities to trade in approved hazardous recyclables merits serious consideration.