India's Aluminium Sector Seeks Import Curbs as Trade Barriers Redirect Low-Grade Scrap

A Double Bind for Domestic Producers

India's aluminium industry finds itself squeezed between rising imports and shrinking export access, a scenario the Aluminium Association of India has flagged in a direct appeal to the Prime Minister's Office. The industry body is calling for immediate trade measures to stem a flood of low-quality scrap that it says threatens both planned investments and the country's foreign exchange reserves.

Aluminium scrap imports climbed to 3.48 million tonnes in fiscal year 2026, according to the association, resulting in foreign exchange outflows exceeding ₹88,400 crore (approximately $10.5 billion). The association argues that this surge is not driven by market fundamentals but by a restructuring of global trade flows as developed economies erect new barriers.

Protectionist Policies Reshape Trade Flows

The United States has raised Section 232 national security tariffs on aluminium to 50 per cent, while the European Union is implementing the Carbon Border Adjustment Mechanism alongside safeguard investigations. Mexico, despite lacking primary smelting capacity, has increased customs duties on aluminium products classified under Chapter 76 to as high as 35 per cent, the association noted.

These measures have a secondary effect: they allow developed economies to retain high-quality aluminium scrap domestically while exporting lower-grade material containing less than 90 per cent aluminium content. Meanwhile, Malaysia and China have moved to restrict imports of poor-quality scrap, leaving India as one of the few large markets without stringent quality thresholds.

The association contends that India now faces a dual threat from global surplus capacity in primary aluminium production and an influx of substandard scrap that undercuts domestic recyclers and processors.

Quality Standards Stuck in Approval Pipeline

The Aluminium Association of India is pressing for the publication of a draft standard titled "Aluminium & Aluminium Alloy Scrap - Requirements & Conditions of Delivery," which has received approval from NITI Aayog, the Bureau of Indian Standards, and the Jawaharlal Nehru Aluminium Research Development and Design Centre. The standard has also cleared the BIS Working Group but has yet to be formally published.

The association argues that any adjustment to aluminium scrap import duties should wait until this standard is in place and grade-specific Harmonised System of Nomenclature codes are introduced. Without these mechanisms, India risks importing material that fails to meet the quality benchmarks adopted by other major markets.

Aluminium scrap alone accounted for ₹40,200 crore (roughly $4.8 billion) in foreign exchange outflows during fiscal 2026, the association said. It is advocating for a domestic collection and recycling infrastructure that would reduce reliance on imported scrap and keep more value within the country.

Industry Stakes and Investment Pipeline

The domestic aluminium sector contributes approximately ₹30,000 crore annually to government revenues and supports more than 800,000 jobs across India's interior regions, according to the association. Leading producers have outlined plans to invest over ₹3 lakh crore (around $36 billion) to double primary aluminium production capacity to 9 million tonnes per annum by fiscal 2033, a move expected to generate an additional 100,000 jobs.

The association warns that unchecked imports could undermine the commercial rationale for these expansions, particularly if domestic producers are forced to compete with low-priced, low-quality scrap that does not meet emerging environmental or technical standards.

The appeal to the Prime Minister's Office represents an escalation in the industry's campaign for protective measures. The association is seeking both an increase in the basic customs duty on aluminium scrap and the implementation of quality-based import controls that would align India with the regulatory approaches now being adopted in other parts of Asia and beyond.

As global supply chains fragment and trade policy becomes a tool of industrial strategy, India's aluminium sector is positioning itself to capture domestic demand growth while insulating producers from what it describes as a wave of low-grade material displaced by protectionist measures elsewhere.