Reduction of Import Duty on Aluminium Scrap
India’s Ministry of Mines has proposed the elimination of the aluminium scrap duty, recommending a reduction of import duty on aluminium scrap, including the removal of the existing duty, to help lower raw material costs for secondary aluminium producers and small businesses. The move could make imported scrap more affordable, ease cost pressures across the recycling industry, and support greater use of recycled aluminium in domestic production.
Crucial Aspects of the Proposed Duty Removal:
Present Tariffs: Unlike other base metal scraps like copper, zinc, and lead, which are already duty-free, aluminium scrap still faces a 2.5% Basic Customs Duty.
Industry and Ministry Support:
The Ministry of Mines and industry bodies encourage the Material Recycling Association of India (MRAI) to support the elimination of this duty to reduce procurement costs for domestic MSMEs and secondary producers.
Reliance on Imports:
India is importing 80% to 85% of its aluminium scrap requirements to bridge gaps in domestic supply.
Opposition:
Major aluminium manufacturers, represented by the Aluminium Association of India (AAI), have opposed the elimination of customs duty. They believe that it could hurt local metal production and market stability.
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Zero Aluminium Scrap customs duty
Recommended by the Indian Ministry of Mines, Zero Aluminium Scrap customs duty will help small and medium-sized enterprises (MSMEs) get cheaper raw materials. In addition, charges like 18% IGST and social welfare surcharges still apply to imports.
Most importantly, other metal scraps like copper, lead, and zinc already enter India duty-free. Several countries in Asia already allow duty-free imports of aluminium scrap.
Conclusion
Removing the 2.5% import duty on aluminium scrap is essential to lower production costs for MSMEs. Additionally, it corrects an inverted duty structure and supports India’s green growth goals.
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