Aluminium Duty Rationalisation Critical to India’s Manufacturing Ambitions, Says CUTS Study

Bengaluru: A new policy paper released by CUTS International has highlighted the urgent need to rationalise aluminium import duties to safeguard India’s secondary aluminium sector and strengthen the competitiveness of MSMEs. The study warns that escalating input costs, driven by the current duty structure, could undermine India’s manufacturing ambitions even as domestic aluminium demand is projected to rise from 5.3 million tonnes today to 8.3 million tonnes by 2030.

Karnataka’s Role in Aluminium Value Chain

Karnataka has emerged as a key hub in India’s aluminium downstream industry, hosting alumina refining operations in Belagavi and supporting diverse MSMEs across Bengaluru, Belagavi, and Hubballi–Dharwad. These enterprises engage in casting, extrusion, machining, fabrication, and component manufacturing. However, rising primary aluminium prices—significantly influenced by the existing 7.5% import duty—are squeezing margins and threatening the viability of small and medium manufacturers.

A senior industry observer noted: “The aluminium industry in Karnataka represents livelihoods, skill development, and regional stability. When MSMEs face cost pressures, the entire value chain—from suppliers to exporters—feels the impact.”

National Competitiveness Imperative

Navendu K. Bharadwaj of the Aluminum Secondary Manufacturers Association (ASMA) stressed the broader implications: “Duty reduction of primary aluminium will enable downstream manufacturers to drive demand for aluminium needed in construction, infrastructure, automobiles, and electronics—key sectors for achieving Viksit Bharat 2047.”

The study points out that elevated domestic aluminium prices relative to international benchmarks create a competitive disadvantage for Indian manufacturers, particularly in fast-growing sectors such as renewable energy, electric vehicles, and electronics.

Policy Recommendations

The paper argues that rationalising duties would deliver multiple benefits:

• Strengthening MSME competitiveness: Lower input costs would help India’s 3,500 aluminium MSMEs compete against duty-free finished imports under FTAs.
• Correcting distortions: Removing the anomaly where raw aluminium faces 7.5% duty while finished products enter duty-free would incentivise domestic value addition.
• Boosting jobs and exports: Enhanced competitiveness would generate employment in labour-intensive downstream sectors and open higher-value export opportunities.

Strategic National Priority

As India advances toward its vision of Viksit Bharat 2047, the aluminium sector’s health is seen as a strategic priority. With applications spanning construction, transportation, packaging, electrical systems, and emerging green technologies, aluminium remains central to industrial growth.

The study concludes that rationalising aluminium import duties is not just a sectoral reform but a national imperative. Addressing cost structures that constrain MSMEs could unlock the full potential of India’s aluminium value chain, driving employment, innovation, and industrial growth across clusters from Odisha to Gujarat, Tamil Nadu to Maharashtra.