AAI urges urgent government action to curb rising aluminium imports, protect domestic industry

THEBUSINESSBYTES BUREAU

BHUBANESWAR, OCTOBER 29, 2025

The Aluminium Association of India (AAI) has called upon the Department for Promotion of Industry and Internal Trade (DPIIT) and the Ministry of Finance to take immediate measures to safeguard India’s aluminium sector from a looming crisis caused by surging imports and global market distortions. The association warned that India risks becoming a dumping ground for low-quality aluminium products, undermining the nation’s strategic and industrial ambitions.

AAI has requested the government to impose a 15% basic customs duty on all aluminium products under Chapter 76, alongside the implementation of stringent quality standards aligned with global benchmarks. The association emphasised that these measures are critical not only to restore fair competition but also to unlock over ₹20 lakh crore worth of investment potential in the aluminium sector — one of the cornerstones of India’s industrial and national security framework.

The appeal comes against the backdrop of escalating geopolitical tariff wars and non-tariff barriers that are reshaping global aluminium trade. The United States, recognising aluminium as a strategic and critical metal, recently increased its import tariffs from 10% to 50%, while China has imposed a 25% duty on aluminium scrap from the US and restricted imports to scrap containing less than 91% aluminium. Similarly, the European Union and the United Kingdom have implemented the Carbon Border Adjustment Mechanism (CBAM), which effectively raises the cost of aluminium imports by 7% to 60%.

In stark contrast, India continues to maintain one of the lowest tariff regimes for aluminium imports despite being the world’s second-largest producer after China. Over the past decade, the country has invested nearly ₹1.5 lakh crore to establish a 4.2 million tonne per annum (MTPA) production capacity, generating employment for over 8 lakh people. However, cheap and substandard imports are rapidly eroding the competitiveness of domestic producers. AAI estimates that imported aluminium could account for as much as 54% of India’s total demand by FY26, a scenario that could severely dent the country’s Atmanirbhar Bharat aspirations.

The statistics paint a troubling picture. Over the last 14 years, aluminium consumption in India has increased by 160%, but imports have risen by a staggering 250%, while aluminium scrap imports have surged by 285%. This import dependence, AAI argues, is not driven by a lack of domestic capacity but by distorted global trade conditions and inadequate protective mechanisms in India.

Unregulated scrap imports are a particular cause for concern. The absence of robust quality standards has opened the door to low-grade, contaminated scrap — often containing hazardous materials such as lead — being imported from countries like the US and EU, where strict recycling norms restrict their use. This substandard material is increasingly finding its way into consumer goods, electrical cables, and utensils, posing serious health and environmental risks. At the same time, it undermines domestic producers who comply with Bureau of Indian Standards (BIS)-certified processes and invest heavily in cleaner, safer production technologies.

To correct these imbalances, AAI has proposed a multi-pronged approach: increasing basic customs duty to 15%, enforcing BIS-aligned standards for aluminium scrap, rationalising duty structures on raw materials to encourage domestic value addition, and harmonising regulations to foster circular economy practices. The association stressed that these interventions would align India’s trade policies with those of advanced economies that already classify aluminium as a strategic resource vital for defence, infrastructure, aerospace, and energy transition initiatives.

If the government adopts the proposed reforms, AAI projects that India’s aluminium production capacity could expand to 9.2 MTPA by 2030, generating more than one lakh new jobs and supporting thousands of micro, small, and medium enterprises (MSMEs). In the longer term, such measures could attract investments exceeding ₹20 lakh crore by 2047, transforming India into a global hub for sustainable aluminium production.

AAI has urged the DPIIT and the Ministry of Finance to prioritise these measures in the upcoming Union Budget 2026–27, emphasising that proactive policy action now is essential to safeguard the future of one of India’s most strategic industrial sectors. Without timely intervention, the association cautioned, India’s aluminium ecosystem — built painstakingly over decades — could face irreversible damage amid intensifying global trade distortions.