Key facts
- India's Material Recycling Association of India (MRAI) wants the government to abolish the 2.5% basic customs duty on aluminium scrap.
- The duty increases raw material costs for Indian recyclers and downstream manufacturers.
- India imports 1.8-2 million tonnes of aluminium scrap annually, meeting 80-85% of its needs.
- Aluminium scrap is the only major base metal scrap category still subject to import duty in India.
- Competitor nations like Thailand, Malaysia, Japan, and South Korea allow duty-free aluminium scrap imports.
- Key scrap exporting regions are increasingly restricting exports, impacting India's supply security.
The Material Recycling Association of India (MRAI) has formally requested the Indian government to eliminate the 2.5% basic customs duty imposed on aluminium scrap. The association argues that this levy inflates raw material costs for domestic recyclers and downstream manufacturers, particularly impacting small and medium-sized enterprises (SMEs) at a time when India heavily relies on imports to satisfy its escalating demand for aluminium.
India's secondary aluminium production has seen substantial growth over the past decade, increasing from 0.85 million tonnes in the 2015-16 financial year to nearly 2.2 million tonnes in 2025-26. Recycled aluminium now represents approximately 35% of the country's total aluminium consumption. However, India continues to depend significantly on imported scrap, with annual imports ranging between 1.8 million and 2 million tonnes. The MRAI estimates that these imports fulfill 80-85% of India's aluminium scrap needs, attributing this reliance to the nation's historically low per capita aluminium consumption (3.3kg compared to the global average of 16kg), which limits domestic scrap availability. The local scrap ecosystem is projected to take another 15-20 years to mature.
Notably, aluminium scrap is now the sole major base metal scrap category still subject to import duty, following exemptions for copper, zinc, and lead scrap in the 2025-26 budget. The MRAI points out that competing manufacturing hubs such as Thailand, Malaysia, Indonesia, Japan, and South Korea permit duty-free imports of aluminium scrap. Furthermore, these countries often export finished aluminium alloys to India under free-trade agreements with zero duty, creating an "inverted duty structure" that disadvantages Indian recyclers.
MRAI president Sanjay Mehta believes that removing the duty would bolster SMEs, enhance the competitiveness of downstream manufacturing, and support India's objective of becoming a global centre for aluminium recycling and advanced material recovery. Recycled aluminium products from India already adhere to Bureau of India Standards (BIS) and international quality benchmarks and are utilized by major companies including Tata Motors, Maruti Suzuki, Honda, TVS Motor, Tata Steel, and JSW Steel.
The association also highlighted increasing restrictions on scrap exports from key supplier regions. MRAI senior vice-president Dhawal Shah noted that countries in the EU, US, Gulf Co-operation Council (GCC), and several African nations are increasingly prioritizing domestic value addition for aluminium scrap, a trend that could jeopardize India's supply security. The US, a significant supplier accounting for roughly one-fifth of India's imported scrap, is considering the Secure Aluminium Supply Chains Act. The EU contributes about 22% of India's imports. In the Gulf, the UAE has implemented a 100 dirham/tonne export duty and a temporary ban on certain recyclables, while Saudi Arabia imposes a 5% export tax; together, these Gulf nations supply nearly 20% of India's scrap imports. Similar export controls are also in place in South Africa, Nigeria, Kenya, and Ghana.
Imported scrap remains crucial for meeting the rising demand from the automotive, construction, engineering, and packaging sectors. The Indian think-tank NITI Aayog forecasts that secondary aluminium will constitute approximately 45% of India's total aluminium demand by 2028. The MRAI further contends that primary aluminium producers already benefit from a 7.5% basic customs duty on primary aluminium imports, rendering additional indirect protection through scrap duties unnecessary.