Downstream aluminium manufacturers have urged the Centre to cut customs duty on both primary aluminium and aluminium scrap, stating that the current tax structure has put micro, small and medium-sized enterprises (MSMEs) under severe cost pressure and eroded their competitiveness, according to PTI. The move comes amid rising global metal prices, freight costs and energy volatility, further squeezing MSMEs in the aluminium value chain.
Industry representation and duty structure
In a joint representation to the mines ministry recently, the Aluminium Secondary Manufacturers Association (ASMA), along with the Cables and Conductors Manufacturers Association of India (CACMAI) and the Federation of All India Aluminium Utensils Manufacturers (FAIAUM), said the effective import duty of 8.25% on primary aluminium and 2.75% on scrap has resulted in domestic producers pricing metal at import parity, squeezing downstream units, according to PTI. The associations argued that this duty structure creates an inverted playing field: finished aluminium products enter under preferential free trade agreement (FTA) concessions at near-zero duty, while primary aluminium attracts higher import duty.
Impact on MSMEs
The industry bodies claimed that margins of downstream MSMEs have compressed by as much as 70% over recent years, while input costs have risen 20-35% in the last three months alone. India's per capita aluminium consumption stands at 2.5 kg — well below the global average of 11 kg, but the immediate concern is the sharp rise in input costs, they said. The cost pressure is hurting sectors including cables, conductors, transmission, energy storage, extrusions, foundries and recycling.
Inverted duty and FTA concerns
| Duty Type | Current Effective Rate |
|---|---|
| Primary aluminium | 8.25% |
| Aluminium scrap | 2.75% |
The associations said the duty structure is creating an inverted playing field, as finished aluminium products enter under preferential FTA concessions at near-zero duty, while primary aluminium attracts higher import duty. This, they said, is hurting sectors such as cables, conductors, transmission, energy storage, extrusions, foundries and recycling.
EU CBAM and policy vision
The associations also flagged the European Union's Carbon Border Adjustment Mechanism (CBAM), saying it could further affect the competitiveness of Indian aluminium exporters. They noted that the mines ministry's vision document calls for higher value addition from domestically produced alumina, and stated that this objective can be supported only if primary aluminium is priced appropriately for downstream users, according to PTI.
Industry bodies have sought a reduction in basic customs duty on primary aluminium and scrap, and said they are willing to present their case in person before the mines ministry. Any duty cut, if rolled out, could ease input costs for downstream industries, improve capacity utilisation and support exports. However, it may draw resistance from primary producers like Hindalco Industries Ltd and Vedanta Aluminium Ltd, who benefit from the current import-parity pricing environment.
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