DGFT Delists 15 Pre-Shipment Inspection Agencies: What It Means for India’s Metal Scrap Trade

India's metal scrap import chain is facing a fresh compliance shock after the Directorate General of Foreign Trade (DGFT) withdrew recognition of 15 Pre-Shipment Inspection Agencies (PSIAs) following a review of their certification practices.

According to DGFT, the review found that several agencies had not followed the prescribed inspection and certification procedures. The regulator specifically identified cases where a large number of Pre-Shipment Inspection Certificates (PSICs) were issued from a single inspection instrument across different countries without adequate due diligence.

The action has already created problems for some importers, particularly where cargo had been inspected by an agency before its recognition was withdrawn but the shipment reached India after that change.

For the recycling and secondary-metal industry, the issue is therefore bigger than the removal of 15 agencies. It raises a fundamental question: Should India continue relying primarily on overseas pre-shipment certification, or move towards a stronger technology-based inspection system at Indian ports?

Why PSIC matters in metal scrap imports

India imports around 13 million tonnes of recyclable metal scrap a year from more than 160 countries, according to figures cited by the Material Recycling Association of India (MRAI). Around 2,500 scrap containers enter India every day, highlighting the scale of the supply chain involved.

The PSIA system exists because imported scrap can carry risks that are not always visible from documentation alone. Indian rules require safeguards against material such as radioactive contamination, explosives, arms, ammunition and other prohibited items.

A PSIA inspects the cargo at the country of origin and issues the PSIC, which the importer submits to Customs for clearance.

For importers, therefore, the PSIC is not just another document. If the required certificate is unavailable, invalid or not accepted, the container can become a costly problem very quickly.

What triggered the action against 15 PSIAs?

DGFT's explanation is important.

The regulator said its review identified agencies that had not followed the prescribed inspection and certification procedure. It found that some PSIAs had issued a large number of PSICs using a single instrument across countries without due diligence. Following due process, DGFT withdrew recognition from 15 agencies.

At the same time, DGFT said that additional PSIAs have been recognised to maintain inspection capacity and reduce disruption to trade.

So this is not simply a case of the government removing agencies and leaving the industry without alternatives. The immediate problem is the transition — particularly for cargoes that were already inspected or already in transit when the status of an agency changed.

The Mundra problem shows how quickly costs can build up

The practical impact is already visible at Mundra.

Business Standard reported that one listed metal recycling company had eight cargoes released after paying penalties and arranging fresh inspection locally, after PSICs issued by agencies whose recognition had subsequently been withdrawn were not accepted for clearance.

The same company reported penalties on seven other cargoes where PSIAs had not uploaded certificates within the newly prescribed time limit.

This is where a regulatory issue becomes a logistics issue.

A container does not wait for free.

Once a shipment reaches the port, every additional day can potentially add:

• demurrage

• detention

• storage

• local inspection charges

• documentation costs

• working-capital costs

• production delays for the recycling mill

• possible disruption to onward transport

For a single container, these costs may appear manageable. Across hundreds or thousands of containers, they can become a significant burden for the industry.

The PSIC timeline has also become tighter

The timing of the DGFT action is particularly important because the PSIA/PSIC system itself has recently undergone tighter digital controls.

On 25 August 2026, DGFT introduced a requirement for PSIAs to generate and issue the PSIC on the same day as the inspection.

Following feedback from industry, the timeline was subsequently relaxed to two days from the inspection date. DGFT also provided a one-time seven-day window for recognised PSIAs to clear backlog certificates relating to inspections conducted before 25 August.

This change may look administrative, but it matters enormously for international cargo.

Imagine a container inspected in the exporting country and loaded on a vessel shortly afterwards. If the PSIC is not generated within the permitted period, the cargo can be physically on its way to India while its critical compliance document remains unresolved.

That is exactly the type of timing mismatch that can turn a paperwork problem into a port-clearance problem.

India already has destination-side inspection infrastructure

This is where the industry's argument becomes interesting.

Indian ports handling un-shredded metallic scrap are required to have appropriate safeguards, including Radiation Portal Monitors and Container Scanners, with the necessary Customs and regulatory clearances. The current DGFT framework lists designated ports for the handling of un-shredded metallic scrap.

The recycling industry argues that India should make greater use of this infrastructure.

MRAI has called for the PSIA/PSIC system to be replaced, or substantially redesigned, in favour of inspection and scanning at Indian ports.

The association has said that 15 of 18 major seaports have modern radiation-scanning infrastructure. However, this is an industry assessment, and DGFT has said it is consulting the Department of Revenue to establish the current availability, installation and operational status of scanning infrastructure at ports.

That distinction is important.

It would be too early to assume that every installed scanner is continuously operational, fully certified or capable of replacing every function currently performed through the PSIA system.

The economics are also significant

MRAI has estimated that overseas inspection and documentation costs are around $200 per container and has argued that moving verification to Indian ports could save approximately $500,000 a day in foreign-exchange outgo, based on the industry's estimate of around 2,500 containers a day.

The arithmetic is straightforward:

2,500 containers × $200 = $500,000 per day

On a simple 365-day basis, that would be approximately:

$500,000 × 365 = $182.5 million per year

But this should be treated as an industry estimate, not an established government saving.

The actual savings would depend on which inspection costs disappear, what additional port inspection costs are introduced, how much infrastructure investment is required and how the replacement system is designed.

Still, the number illustrates why the issue matters to the recycling industry.

The "safe country" exemption already provides a partial alternative

The PSIC framework is not identical for every shipment.

Under India's rules, metallic scrap originating from designated safe countries or regions — including the US, UK, Canada, New Zealand, Australia and the European Union — can qualify for an exemption from the PSIC requirement when the prescribed conditions are met.

The cargo must be accompanied by the required supplier or scrap-yard certification and remains subject to radiation and explosive checks through the relevant port infrastructure. The exemption is also linked to designated ports and does not simply apply to every shipment arriving through any Indian port.

DGFT has indicated that it is looking at expanding the Safe Countries/Regions list, which could gradually reduce reliance on PSIAs for qualifying cargo.

That could become an important part of the solution.

Why the industry wants a different model

The industry's argument is not simply about saving inspection fees.

It is also about control.

Under the current model, an Indian importer can be affected by the availability, capability, documentation practices or regulatory status of an inspection agency operating thousands of kilometres away.

If the inspection is instead carried out at an Indian port using radiation monitors, scanners and risk-based Customs procedures, the importer would have greater visibility over the final compliance process.

There is also a potential advantage in having the physical inspection and Customs clearance process located within the same regulatory environment.

But there is a trade-off.

A destination-based system would require sufficient scanners, trained personnel, inspection capacity, reliable equipment uptime and fast Customs processing. If every container simply waits for inspection after arrival, the reform could shift the bottleneck from the exporting country to the Indian port.

So the question is not merely PSIA versus port inspection.

The real question is:

Which system can provide the strongest safety controls without creating a new logistics bottleneck?

There is also a safety reason for keeping pre-shipment controls

This part of the debate should not be overlooked.

The purpose of pre-shipment inspection is not only commercial documentation. It is intended to identify potentially dangerous or prohibited material before it enters India's logistics system.

India's existing rules therefore require pre-shipment certification for metallic scrap in many circumstances while also requiring destination-side controls at designated ports.

DGFT has defended the source-side system on precisely these grounds, saying that until adequate risk-mitigation mechanisms are available, pre-shipment inspection remains an important safety safeguard.

This suggests that any replacement system would need to preserve the safety objective, not simply remove the paperwork.

What importers should watch now

For metal scrap importers, the immediate priority is compliance rather than waiting for the policy debate to be resolved.

Before booking a shipment, importers should verify:

1. Is the PSIA currently recognised by DGFT?

Do not rely solely on an old agency list or a previous shipment.

2. Is the PSIA authorised for the country where the cargo is being inspected?

PSIA recognition is linked to notified areas of operation, so an agency's existence on a list does not automatically mean it can inspect cargo from every country.

3. Is the inspection instrument properly mapped and valid?

The recent tightening of the digital PSIC process puts greater emphasis on the inspection instrument, inspector information and electronic evidence.

4. Can the agency issue the PSIC within the permitted timeline?

The current post-August framework allows two days from inspection, following DGFT's revision of the original same-day requirement.

5. Is the destination port permitted for the particular scrap shipment?

Port eligibility and the distinction between shredded and un-shredded scrap matter.

6. If claiming the safe-country exemption, are all conditions actually satisfied?

An origin from a qualifying country alone is not enough; the prescribed port and documentation requirements also matter.

What happens next?

The latest developments suggest that India is unlikely to simply abandon scrap-import controls.

Instead, the more realistic possibility is a gradual evolution of the system.

That could include:

• more recognised PSIAs;

• tighter digital monitoring of existing agencies;

• expansion of the Safe Countries/Regions list;

• greater use of port-based radiation and scanning infrastructure;

• stronger risk-based Customs screening;

• and potentially a larger role for technology at Indian ports.

MRAI's latest position shows that the industry wants a more India-centric system. Reuters reported on 28 September that the association had formally asked DGFT to replace the existing overseas-certification model with local inspection at Indian ports, arguing that the present system creates uncertainty and can lead to container accumulation, detention, demurrage and higher raw-material costs.

DGFT, meanwhile, has said it is examining the operational status of scanning infrastructure and considering expansion of the safe-country network.

The bigger issue for India's recycling industry

The 15 PSIA delistings have exposed a weakness that was already sitting inside the supply chain.

India's recycling industry depends on a continuous flow of imported scrap. Every additional compliance step has the potential to affect not only importers but also recyclers, steel mills, downstream manufacturers, shipping lines, freight forwarders and ports.

At the same time, safety cannot be compromised simply to make cargo move faster.

The challenge for policymakers is therefore to build a system that achieves both objectives:

stronger detection and security, with faster and more predictable cargo clearance.

The immediate PSIA cancellations may eventually become a temporary regulatory episode. But the debate they have triggered is likely to last much longer.

For India's metal recycling industry, the real opportunity may be to move from a paper-heavy, overseas-dependent inspection model towards a digitally monitored, risk-based and technology-driven inspection system at the country's ports — provided the infrastructure and operational capacity are strong enough to support it.

For importers, however, the message is much simpler for now:

Check the PSIA. Check the country of inspection. Check the certificate timeline. Check the port. And do it before the cargo sails.