Struggling with declining exports and rising imports, the domestic aluminium manufacturing industry may put its proposed Rs 2 lakh crore capacity expansion plan on the back burner, several industry executives said.
Shrinking Exports and Soaring Scrap Imports
From shipments of 2.4 million tonnes (MT) of primary aluminium in FY22, India’s exports of these goods declined to 1.8 MT in FY25 due to tariff and non-tariff barriers erected by the US and Europe, among others.
Imports, on the other hand, are on the rise, particularly of scrap and other products such as aluminium plates, foil and structures.
Aluminium scrap imports increased from 1.66 MT in FY22 to 1.81 MT in FY25, while imports of other aluminium products doubled from 0.67 MT in FY22 to 1.2 MT in FY25.
“India must respond, not with blanket protectionism, but with smart regulation. A quality firewall is essential to prevent substandard scrap from undermining domestic capabilities and sustainability goals,” an official said.
Sumit Jhunjhunwala, Vice President, ICRA said, “While India is a net exporter of primary aluminium, imports predominantly comprise aluminium scrap.
The strengthening of the domestic scrap ecosystem would be a prerequisite to reduce the import dependence over the medium term.”
The ongoing and planned investments in domestic aluminium capacity are expected to take India’s primary aluminium production capacity to 7.2 MTPA by FY30 and around nine MTPA by FY33 from around 4.2 MTPA now, as per Aluminium Vision Document, released by the Ministry of Mines, earlier this year.
Industry players want the government to introduce strict quality standards for aluminium scrap, in line with global peers such as the EU, Malaysia, and China, to prevent India from becoming a dumping ground for waste.
While this will also develop the domestic scrap market and promote the circular economy, increasing the basic customs duty on all aluminium products to a flat 15% from 7.5% now will rein in the imports.
Industry’s Call for a Quality Firewall
The Aluminium Association of India wants a threefold increase in the import duty on scrap to 7.5%, saying, “This will prevent India from becoming a dumping ground for
unchecked or poor quality scrap and promote domestic scrap collection in line with the government’s circular economy goals. India currently doesn’t have appropriate
BIS standards on scrap.” India is now the world’s largest importer of aluminium scrap.
Federation of Indian Mining Industries (FIMI) said increasing the basic customs duty on primary aluminium and downstream products to 15%, to counter the sharp rise in aluminium imports and protect domestic manufacturing.
“India’s aluminium manufacturing base is currently under threat by a surge in imports from aluminium surplus nations driven by global tariff and non-tariff protectionist measures on aluminium,” FIMI said.