Budget expectations: AAI urges the government to increase basic customs duty on all aluminium products

Ahead of the Union Budget 2026-27, Aluminium Association of India (AAI) has asked the government to increase the basic customs duty on all aluminium products, including scrap, to 15% to prevent the rise in low-quality imports and protect domestic players. It said such a move will ensure the quality of aluminium scrap in line with global peers like the EU and China and prevent India to become a dumping ground for the metal waste.

AAI also flagged that the domestic industry is suffering from unhindered imports despite sufficient domestic capacity available to meet the demand. With rising imports, India's trade deficit with regards to aluminium is expected to hit an all-time high of $3.4 billion (Rs 30,000 crore) in FY26. The current duty on primary aluminium products is 7.5%, while aluminium scrap faces 2.5% levy and downstream aluminium items in the range of 7.5% to 10%.

In order to prevent India becoming a dumping ground for waste, AAI has also asked the government to bring in strict quality standards on aluminium scrap in line with those implemented by the European Union (EU), Malaysia, and China. This will develop domestic scrap market and promote circular economy.

Aluminium prices have jumped over 20% in the last year on the London Metal Exchange. The prices are expected to remain elevated in the near term as China, the world’s largest aluminium producer, has enforced production restrictions at 45 million tonnes. Further raw material disruptions at bauxite supply disruptions in Guinea and Brazil have led to overall supply shortages of aluminium in global markets.

Shares of domestic aluminium manufacturers like Hindalco and National Aluminium have rallied over 50% in the past year amid a sharp rally in industrial metals like aluminium, copper, silver and others.

The global aluminium industry organisations, like the International Aluminium Institute has said that the aluminium market has entered intoa structural deficit for the first time in 20 years.