The Aluminium Association of India has requested the government to raise duties on low-grade scrap imports and finalize quality standards. This move aims to curb the influx of poor-quality materials and protect domestic manufacturers from rising import competition. With India's aluminium import bill hitting ₹88,434 crore in FY26, the industry is pushing for policies to support local production and reduce foreign exchange outflows.
The Aluminium Association of India (AAI) has formally approached the finance ministry, seeking stricter import safeguards to protect the domestic aluminium industry. As global trade becomes increasingly protectionist, with nations like the US and Mexico implementing high tariffs to defend their local producers, the AAI argues that India needs similar defensive measures to remain competitive and prevent its market from being used as a dumping ground for hazardous, low-grade aluminium scrap.
Call for Strict BIS Quality Standards
A critical part of the industry's demand is the immediate notification of final quality standards by the Bureau of Indian Standards (BIS). These standards, which have already received approval from NITI Aayog, aim to categorize scrap based on its aluminium content. By distinguishing between high-grade materials and low-grade, impurity-laden scrap, the industry hopes to gain better control over what enters the country. The AAI specifically proposes that after these standards are officially notified, the basic customs duty on low-grade aluminium scrap—classified as Grades 3 through 7—should be increased to 7.5%.
Surge in Import Costs and Volumes
The industry's concerns are backed by data showing a significant increase in the country's reliance on imported aluminium. According to information from the Ministry of Commerce, the total volume of aluminium imports rose from 1.53 million tonnes per annum in FY15 to 3.48 million tonnes per annum by FY26. This trend has placed immense pressure on the national exchequer, with the total import bill climbing to ₹88,434 crore. Scrap imports represent a substantial portion of this, having grown from 840 thousand tonnes per annum to over 2 million tonnes per annum in the same period, resulting in a foreign exchange outflow of ₹40,203 crore in the last fiscal year alone.
Balancing Protectionism and Circular Economy
The AAI emphasizes that while protecting domestic capacity is a priority, there is also a need to build a more robust local scrap collection and recycling ecosystem. By curbing the influx of low-quality waste, the industry aims to encourage the use of higher-quality materials and support India’s long-term circular economy goals. This strategy is also viewed as a way to counter the competitive pricing pressures currently stemming from large-scale imports arriving from various Gulf and ASEAN nations.
Investors should track whether the government moves ahead with the proposed duty changes or the notification of the BIS standards. The next important updates will be the ministry's response to these policy requests and any subsequent changes in the HSN code structure for different grades of aluminium scrap, as these will directly influence the cost structure and profit margins for domestic aluminium producers.