Aluminium Association of India Calls for Government Support to Boost Investments
The Aluminium Association of India (AAI), the apex body representing the leading aluminium producers in India, has submitted a pre-budget representation to the Department for Promotion of Industry and Internal Trade (DPIIT) under the Ministry of Commerce. The submission emphasizes aluminium's crucial role in India’s economic growth, particularly as the nation aims to achieve the status of a 'Viksit Bharat' or developed nation by 2047. High aluminium consumption is often regarded as an indicator of advanced economies, given its extensive use in both current and emerging technologies. Consequently, countries such as the United States, Malaysia, and Indonesia have designated aluminium as a 'strategic sector'.
Despite domestic demand for aluminium being projected to reach 10 million tonnes per annum (MTPA) by 2030, India’s per capita consumption remains low, at around 3 kg per year, compared to a global average of 12 kg. The Indian aluminium industry has already invested over INR 1.5 lakh crore (approximately $20 billion) to expand production capacity to 4.2 MTPA. However, an additional investment of INR 3 lakh crore (around $40 billion) will be required over the next six years to meet future demand while also creating new job opportunities across the country.
Aluminium is a strategic metal with widespread applications in defense, aerospace, renewable energy, electric vehicles, power transmission, and sustainable infrastructure. The AAI has underscored the importance of achieving self-sufficiency in aluminium production to support these critical sectors. To attract fresh investments, the AAI has requested that the Central Government protect the industry from rising imports. In recent years, imports of primary aluminium have doubled, accompanied by a significant increase in low-quality scrap and downstream products, especially from China.
According to industry representatives, the influx of imports has deterred new investments in the domestic aluminium sector, despite India having all the resources needed to emerge as a global aluminium hub. The AAI attributes the rise in imports to low import duties on primary and downstream products, as well as a disparity in duties between primary goods and aluminium scrap. This situation contrasts with other key non-ferrous metals, where duties for primary and scrap materials are equivalent.
The AAI has urged the Central Government to raise the import duty on primary and downstream aluminium products from the current 7.5% to 10%. Additionally, it recommends setting the duty on aluminium scrap at 7.5%, aligning it with other aluminium products. This measure is expected to encourage the recycling of domestic scrap and limit the influx of low-quality foreign scrap, thereby strengthening the circular economy.
To improve the global competitiveness of India's aluminium industry, the AAI is advocating for policies that create a sustainable growth environment. Currently, the industry bears around 17% of its production cost in taxes, levies, and regulatory compliance charges. The AAI has called for a rationalization of duties on key raw materials to alleviate this burden and foster growth for the domestic industry.
Existing investments in production capacity have already created over 800,000 direct and indirect jobs and spurred the development of more than 4,000 small and medium enterprises (SMEs), particularly in the downstream sector in remote regions. The additional investment of INR 3 lakh crore ($40 billion) would align with the vision of "Atmanirbhar Bharat" (self-reliant India) and is expected to generate 2 million livelihood opportunities across the country. With appropriate government support in the form of duty rationalization and enhanced import restrictions, domestic aluminium producers are confident in contributing significantly to India's journey towards self-reliance.
