en.Wedoany.com Reported - A working group under India's Ministry of Mines has reached a consensus recommending the removal of the 2.5% Basic Customs Duty (BCD) on aluminum scrap imports. The proposal is expected to be submitted to the Ministry of Finance this month or next for a final decision.
The proposal aims to address the inverted tariff structure. Industry stakeholders point out that this structure increases raw material costs for domestic downstream manufacturers while allowing finished aluminum products from Free Trade Agreement (FTA) partners, particularly ASEAN countries, to enter India at low or zero tariffs.
Downstream aluminum manufacturers, including recyclers, rolling mills, and producers of automotive components and utensils, are deeply concerned about the current tariff structure. These companies rely heavily on imported scrap as a key raw material. Although they pay import duties on scrap, their finished products compete with aluminum goods that often enter India duty-free under FTAs, thereby affecting the competitiveness of domestic value-added products.
According to sources, the Ministry of Mines supports removing this tariff, noting that aluminum is currently the only major non-ferrous metal subject to such an import duty. India imports approximately 1.6-1.8 million tons of aluminum scrap annually, primarily from Europe, the United States, and the United Kingdom.
The proposal comes amid high aluminum prices. Driven by supply disruptions due to conflicts in West Asia and production issues at major smelters, London Metal Exchange (LME) aluminum prices rose from around $2,300-2,600 per ton in 2024 to over $3,800 per ton by mid-2026. Although prices have retreated somewhat in recent weeks, they remain significantly above last year's levels. Aluminum scrap prices have also increased by 20-25%, reflecting stronger primary aluminum prices and tighter scrap supply.
With growing demand for recycled low-carbon aluminum, India's aluminum scrap imports are expected to increase to 1.9-2.0 million tons this fiscal year. However, global scrap supply is becoming increasingly tight, as some countries, particularly in Europe, are retaining more recyclable materials for domestic recycling rather than export.
India's reliance on imported scrap is expected to persist in the medium term. India's per capita aluminum consumption is approximately 2.5 kg, far below the global average of 11 kg, limiting domestic scrap generation. Industry estimates suggest that, with continued consumption growth, India is unlikely to generate sufficient domestic aluminum scrap to meet demand for at least the next decade.
Some primary aluminum producers have called for stricter quality standards on imported scrap before implementing tariff relief. However, industry sources argue that imported scrap comes from various end-of-life products, making it impractical to set strict product specifications. They also note that existing import classification codes are sufficient and that quality standards should be addressed separately from the proposed tariff decision.
