In a notable development, India’s primary aluminium producers have sought tighter quality controls and higher duties on low-grade scrap imports, arguing that the country risks becoming a dumping ground as trade barriers rise across major export markets.
In representations to the finance and mines ministries, the Aluminium Association of India (AAI) asked the government to retain the existing 2.5% basic customs duty on aluminium scrap until a pending Bureau of Indian Standards framework is notified and separate customs classifications are created for different grades of scrap.
Once these safeguards are in place, the association wants the duty on lower-quality scrap classified under Grades 3 to 7 to be raised to 7.5%.
The demand comes as India’s aluminium imports have more than doubled from 1.53 million tonnes in FY15 to a record 3.48 million tonnes in FY26, according to commerce ministry data cited by the association. The value of imports increased nearly fourfold from Rs 23,328 crore to Rs 88,434 crore during the period.
Scrap imports alone rose from 840,000 tonnes in FY15 to 2.03 million tonnes in FY26, resulting in a foreign-exchange outgo of Rs 40,203 crore, AAI said. This represents a 141% increase in scrap volumes over the period.
Export doors narrow, imports rise
The association said domestic producers were facing pressure from both ends: an influx of imported aluminium and scrap at home and shrinking access to overseas markets.
The United States increased its Section 232 tariff on most aluminium and steel imports from 25% to 50% with effect from June 4, 2025. The measure was intended to provide greater protection to US producers and encourage domestic capacity creation.
AAI also pointed to higher trade barriers in Mexico, the expansion of aluminium smelting capacity in Indonesia, supplies from Russia and rising imports from Gulf and ASEAN countries as emerging risks for Indian producers.
Indonesia’s primary aluminium production was projected to rise from about 815,000 tonnes in 2025 to 1.6 million tonnes in 2026 and 2.5 million tonnes in 2027, as Chinese-backed companies expand smelting capacity in the country. The additional supply has raised concerns over a global surplus and greater competition in Asian markets.
“Major economies are protecting their domestic aluminium industries through higher import duties and other trade measures to attract investments, expand capacities and reduce import dependence,” the association said, arguing that India should strengthen its own safeguards.
Quality rules before duty reset
At the centre of AAI’s proposal is the pending standard titled Aluminium and Aluminium Alloys Scrap — Requirements and Conditions of Delivery.
The draft standard, identified as MTD 7 (20323), lays down grades, sampling procedures and testing requirements for aluminium scrap. It would classify shipments according to aluminium content and place limits on metallic and non-metallic foreign material, moisture and other impurities.
According to the association, the framework has undergone consultations involving BIS, NITI Aayog, the Jawaharlal Nehru Aluminium Research Development and Design Centre, the mines ministry, primary producers and recyclers, but has remained pending for more than two years.
Once notified, the standard would divide scrap into grades ranging from material containing more than 95% aluminium to scrap with aluminium content below 60%. AAI said the government should simultaneously introduce grade-wise Harmonised System of Nomenclature codes under HS 7602.
Aluminium scrap is currently grouped under a broad customs classification, making it difficult to distinguish high-quality material required by organised recyclers from low-grade consignments containing greater quantities of impurities.
“To restrict imports of poor-quality scrap, import duty on low-grade scrap should be enhanced to 7.5%,” the association said.
It warned that the absence of enforceable quality specifications could allow contaminated or low-grade material to enter products such as electrical equipment, consumer durables and utensils, affecting product quality and safety.
(With inputs from PTI)