Aluminium Recyclers And Producers Split Over Removing Scrap Import Duties

New Delhi, Jul 6 (KNN) Domestic aluminium recyclers and consumers are locked in a dispute with primary producers over customs duties and import barriers, with the Centre currently levying a 7.5 per cent Basic Customs Duty (BCD) on primary aluminium and 2.5 per cent on aluminium scrap.

Dhawal Shah, Senior VP, Material Recycling Association of India (MRAI), said the two sides of the industry recently held a joint meeting with the Ministry of Mines. 

“It was agreed by all that import duty on aluminium scrap should be removed,” Shah noted, adding that India predominantly imports processed aluminium scrap, ET reported.

Primary Producers Flag Investment Concerns

The Aluminium Association of India (AAI), a body representing primary producers, has written to the Prime Minister's Office (PMO) raising concerns that rising imports of substandard scrap threaten over Rs 3 lakh crore in planned investments. 

The association said its capacity had more than doubled from 2 million tonnes per annum (MTPA) to 4.2 MTPA over the last decade — the largest globally after China — with these investments expedited following the last increase in BCD, from 5 per cent to 7.5 per cent, in fiscal 2014-15. 

The AAI has called for quality control regulations on aluminium scrap to curb substandard imports.

Shah, disputing the characterisation, said, “There has been no reported evidence from Customs or other government authorities indicating any significant influx of sub-standard material into the domestic market,” as quoted by ET.

Downstream Industry Seeks Duty Rationalisation

The Aluminium Secondary Manufacturers Association (ASMA), an industry body representing around 3,500 micro, small and medium enterprises (MSMEs) with a processing capacity of 3.9 million tonnes, is also pushing for duty removal. 

In a statement, ASMA called for rationalising customs duties to improve raw material affordability, noting that primary aluminium accounts for up to 80 per cent of production costs for downstream manufacturers.

Global Context

Making the case for lower duties and easier scrap imports, Shah said major exporting regions, including Europe, the Middle East and the United States, are increasingly treating aluminium scrap as a strategic resource and introducing measures to retain more of it within their own economies to support low-carbon manufacturing. 

He said aluminium scrap consumption in the automotive and transport, construction and packaging sectors is rising at a compounded annual rate of 8.6 per cent, even as domestic scrap availability has remained limited against rising demand from foundries, rolling mills and extruders.

(KNN Bureau)