Budget Wish: Downstream aluminium companies seek basic customs duty scrapped

New Delhi: Downstream aluminium manufacturers and traders have sought the removal of basic customs duty on primary aluminium in the upcoming Union budget for 2027-28.

A recent joint communication to the finance ministry by a few associations in the related segments said that high raw material costs are affecting the competitiveness of domestic manufacturers.

In the communication, the Aluminium Extrusion Manufacturers Association of India, along with the Cable and Conductor Manufacturers Association of India, the Federation of All India Aluminium Utensils Manufacturers and the Confederation of All India Traders, have proposed removing the basic customs duty on primary aluminium, which currently attracts a 7.5% duty, people aware of the development said.


Primary aluminium attracts an effective import duty of 8.25%, which includes the social welfare surcharge. The industry associations said domestic primary aluminium prices are influenced by international prices and import-parity benchmarks, which forces downstream manufacturers to pay higher raw material costs even when buying from domestic producers.

"The prevailing tariff structure creates a significant cost challenge for India's downstream aluminium manufacturers. Domestic primary aluminium prices are influenced by international prices and import-parity considerations," said one of the persons, who did not wish to be identified. "The customs duty applicable to imported primary aluminium consequently forms an important component of the domestic price benchmark."

Lower input costs could encourage investment in downstream manufacturing and increase aluminium consumption across automobiles, construction, electrical equipment, packaging and infrastructure, the associations said.