Aluminium industry divided over removing custom duties for scraps and finished products

Domestic aluminium recyclers, and consumers are in tussle with primary producers over custom duties and import barriers. The centre currently levies at 7.5% Basic Customs Duty on primary aluminium and 2.5% on aluminium scrap.

Dhawal Shah, Senior Vice President, Material Recycling Association of India (MRAI) says the two sides of the industry recently held a joint meeting with the Ministry of Mines. “It was agreed by all that import duty on aluminium scrap should be removed,” Shah said, adding that India predominantly imports processed aluminium scrap.

In a letter to the prime minister’s office, the Aluminium Association of India (AAI), a body of primary producers, has raised concerns about rising substandard scrap imports threatening over Rs 3 lakh crore of planned investments. In their representation, AAI said their capacity doubled from 2 million tonnes per annum (MTPA) to 4.2 MTPA (largest globally after China) over the last decade.


“These investments were expedited after the last basic custom’s duty enhancement from 5% to 7.5% in fiscal 2014-15,” the AAI said, batting for quality control regulations on aluminium scrap to curb any substandard imports.

“There has been no reported evidence from Customs or other government authorities indicating any significant influx of sub-standard material into the domestic market,” Shah said.

Aluminium Secondary Manufacturers Association (ASMA), an industry body having around 3,500 micro, small, and medium enterprise players with a processing capacity of 3.9 MT is also pushing for duty removals.

Primary aluminium accounts for up to 80% production costs for downstream manufacturers.

In a statement, ASMA has called for rationalising custom duties to improve raw material affordability.

Building a case for lowering duties and easing scrap imports, Shah said many major exporting regions, including Europe, the Middle East and the United States, are increasingly treating aluminium scrap as a strategic resource and are introducing measures to retain more of it within their own economies to support low-carbon manufacturing.

“Aluminium scrap consumption in automotive and transport, construction and packaging sectors is also increasing at 8.6% compounded annually,” he said, noting domestic scrap availability has remained limited, whereas demand from foundries, rolling mills and extruders has continued to rise.