CUTS Study Warns High Aluminium Import Duty Threatens MSMEs, Calls for Policy Reset
A new study by CUTS International has spotlighted the growing stress in India’s secondary aluminium industry, cautioning that rising input costs could disrupt the nation’s manufacturing push. Aluminium demand is set to increase to 8.3 million tonnes by 2030, up from the current 5.3 million tonnes, making the issue even more urgent.
The paper emphasises that the present import duty structure is unintentionally hurting MSMEs—enterprises that form the backbone of India’s manufacturing value chain and are vital for achieving the Viksit Bharat 2047 vision.
Maharashtra’s Pivotal Role
With major aluminium-related industrial activity across Nagpur, Chandrapur, Raigad and Pune, Maharashtra has emerged as a crucial battleground. Beyond large smelting and refining units, the state supports thousands of MSMEs engaged in downstream activities like casting, extrusions and component manufacturing.
These businesses now face steep challenges. The 7.5% import duty on primary aluminium keeps input costs elevated, squeezing MSMEs that depend on predictable and affordable raw materials.
“The aluminium industry here is about livelihoods and economic continuity,” an industry analyst said. “Cost pressures hit small firms first and hardest, and their struggles reverberate across the value chain.”
Industry Voices
ASMA’s Navendu K. Bharadwaj highlighted the broader implications.
“A reduction in duty on primary aluminium is essential if downstream manufacturers are to drive demand and support national development,” he said. “Aluminium value-added products power sectors like infrastructure, mobility and electronics.”
The paper notes that the current duty regime makes domestic aluminium pricier than global benchmarks, harming the competitiveness of high-growth industries such as electric vehicles, renewable energy systems and construction.
Recommendations
According to the study, rationalising duties would:
• Strengthen downstream MSME competitiveness against duty-free finished imports.
• Fix the inverted duty anomaly.
• Boost employment and elevate India’s aluminium exports.
The report concludes that with India positioning itself as a major global manufacturing hub, addressing input cost barriers in the aluminium sector is essential to unlocking employment, innovation and balanced industrial growth across states including Odisha, Gujarat, Tamil Nadu and Maharashtra.
