Two downstream aluminium industry bodies have submitted a joint representation to the Ministry of Mines on July 14, seeking reduction in effective Customs duty on primary aluminium. According to reports from The Hindu BusinessLine, the Aluminium Secondary Manufacturers Association (ASMA), the Cable and Conductor Manufacturers Association of India (Cacmai) and the Federation of All India Aluminium Utensils Manufacturers (FAIAUM) argue that the current 8.25 per cent effective duty on primary aluminium and 2.75 per cent on scrap has become a critical burden on downstream manufacturers. Primary aluminium currently attracts a basic Customs duty of 7.5 per cent plus a 0.75 per cent social welfare surcharge, creating the effective levy structure that enables import-parity pricing by domestic producers. The associations have stated they are willing to present their case in person before the ministry to support their proposal. The move comes at a time when India's per capita aluminium consumption at 2.5 kg remains well below the global average of 11 kg, highlighting the sector's growth potential despite current cost pressures.
The industry associations have highlighted severe financial pressures facing downstream manufacturers. As reported by The Hindu BusinessLine, the downstream industry paid about $470 million more than necessary to domestic primary producers in 2022 due to import-parity pricing, according to the Ministry of Mines' Aluminium Vision document. The associations estimate that overall input costs have increased by 20-35 per cent over the past three months alone, driven by rising global aluminium prices. International primary aluminium prices have surged from around $2,200 per tonne three years ago to more than $3,700 per tonne, influenced by geopolitical tensions in West Asia, logistics bottlenecks, and elevated freight costs. Recent market data shows aluminium prices continuing to show sideways movement in a narrow range, with LME aluminium 3M contract closing at $3,177 per tonne, up 0.32 per cent, while SHFE aluminium 2608 contract closed at RMB 23,165 per tonne, down 0.19 per cent. The industry bodies warn that downstream MSMEs have seen margin compression of up to 70 per cent in recent years, reducing profitability and increasing closure risks.
The industry bodies have identified an inverted duty structure that disadvantages downstream manufacturers. According to the representation, while primary aluminium attracts 8.25 per cent effective duty and 2.75 per cent on scrap, several finished aluminium products enter India at low or zero duty under free trade agreements with various countries. As reported by The Hindu BusinessLine, India imported $4.1 billion worth of finished aluminium products in 2025-26, with nearly a quarter entering at preferential rates. A Global Trade Research Initiative report estimates that import-parity pricing raises the cost of aluminium-intensive government infrastructure projects by about 3 per cent, affecting sectors including power transmission, railways, Metro projects, renewable energy, and defence. The associations also flagged the European Union's Carbon Border Adjustment Mechanism, saying it could further affect the competitiveness of Indian aluminium exporters. The duty structure is creating an inverted playing field, as finished aluminium products enter under preferential free trade agreement concessions at near-zero duty, while primary aluminium attracts higher import duty, hurting sectors such as cables, conductors, transmission, energy storage, extrusions, foundries and recycling.
The Ministry of Mines has not yet responded to the industry representation, with an email seeking comments remaining unanswered until press time. According to The Hindu BusinessLine, primary producers argue that the levy is necessary to protect domestic smelting capacity, creating a fundamental disagreement between upstream and downstream sectors. The associations said 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. The move comes at a time when MSME manufacturers in the aluminium value chain are facing pressure from higher global metal prices, freight costs and energy volatility. Any duty cut, if rolled out, could ease input costs for downstream industries, improve capacity utilisation and support exports, though it may draw resistance from primary producers like Hindalco Industries Ltd and Vedanta Aluminium Ltd who benefit from the current import-parity pricing environment.
