Govt Panel Likely To Recommend Scrapping 2.5% Aluminium Scrap Import Duty

A mines ministry joint working group is likely to recommend the removal of the 2.5% import duty on aluminium scrap after reaching broad agreement on the proposal, according to a report by Moneycontrol citing sources.

The recommendation is expected to be sent to the finance ministry this month, subject to internal approvals, for a final decision.

The move is aimed at addressing concerns raised by domestic aluminium users who believe the existing duty structure puts them at a disadvantage.

Downstream industries such as recyclers, rolling mills and manufacturers of auto components and utensils import aluminium scrap as a raw material but are required to pay import duty on these supplies.

At the same time, they compete with finished aluminium products imported from countries with free trade agreements, including ASEAN nations, where duties can be lower or zero.

Industry representatives have argued that this creates an inverted duty structure that discourages domestic value addition.

While companies source aluminium from both domestic producers and overseas markets, scrap accounts for the majority of imported aluminium-related materials.

Sources said the mines ministry supports removing the levy as aluminium is currently the only non-ferrous metal facing such an import duty.

The push for duty relief comes amid a sharp rise in global aluminium prices.

Prices on the London Metal Exchange increased from around $2,300-$2,600 per tonne in 2024 to above $3,800 per tonne by mid-2026, driven by supply disruptions, geopolitical tensions and production issues at major smelters.

Although prices have eased recently, they remain significantly higher than previous levels. Aluminium scrap prices have also increased by around 20-25%, supported by stronger benchmark prices and tighter global availability.

India currently imports around 1.6-1.8 million tonnes of aluminium scrap annually, mainly from Europe, the US and the UK.

This figure is expected to rise to nearly 1.9-2 million tonnes this fiscal year as demand grows for recycled and low-carbon aluminium.

However, sourcing scrap could become more challenging as several countries are increasingly prioritising domestic recycling and reducing exports of recyclable materials.

With India’s per capita aluminium consumption at around 2.5 kg compared with the global average of about 11 kg, domestic scrap generation remains insufficient.

Industry experts believe India will continue to depend on imported aluminium scrap for at least another decade as consumption rises.