India’s downstream aluminium sector needs an urgent inverted duty correction
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Update time : 2026-02-24 13:48:20
India’s aluminium sector occupies a strategically important position in the country’s industrial landscape. With rich bauxite reserves and four large integrated primary producers forming the backbone of upstream capacity, India possesses the natural advantages needed to build a competitive, export-oriented aluminium ecosystem. Yet, despite this inherent potential, the downstream aluminium value chain, comprised largely of MSMEs, continues to face market access barriers that undermine its domestic viability and global competitiveness. The current tariff structure prioritises protectionism over long-term industrial growth and value addition.
Primary aluminium is currently taxed at 8.25 per cent (7.5 per cent basic customs duty + 0.75 per cent surcharge), which was originally introduced to provide a measure of protection to the domestic primary industry. However, in practice, this tariff has become a pricing anchor that enables the primary producers to price the primary metal at import-parity levels, rather than in accordance with their own significantly lower cost structures. A recently released report by CUTS International has showcased multiple years of pricing data wherein domestic aluminium prices track the London Metal Exchange (LME) benchmark closely, with a consistent positive price spread in the range of INR 30,000 to INR 60,000 per tonne. Even during years when international prices softened, domestic prices remained rigid, revealing a pricing mechanism that transmits global volatility downstream while insulating primary producers from competitive pressures.
