A leading industry group
representing small and mid-sized firms that recycle metals,
plastics, e-waste, rubber and glass has sought intervention from
the Prime Minister’s Office (PMO) to remove an import tax on
aluminium scrap, citing rising costs and strong demand,
according to a letter reviewed by Reuters.
India, a major global buyer of aluminium scrap, imposes a
2.5% tariff on the product and relies heavily on supplies from
the European Union, the U.S. and the Middle East.
The EU’s planned export curbs and disruptions from the
U.S.-Israeli war on Iran have tightened supplies, industry
officials said.
Aluminium scrap is used mainly by the auto sector as well as
in construction, foils and cables.
“MSMEs (Micro, Small and Medium Enterprises) depend on
high-quality imported scrap to meet technical specifications,
but the 2.5% basic customs duty raises input costs and strains
working capital, limiting access to reliable recycled material,”
the Material Recycling Association of India (MRAI) said in a
March 26 letter to the PMO.
The PMO and the MRAI did not respond to Reuters requests for
comment.
Scrapping of import tariff would reduce costs and improve
competitiveness, the letter said.
The secondary sector that relies on scrap contributes nearly
40% of India’s total aluminium supply of around 2.2 million
metric tons per year and it meets 85% of its scrap needs through
imports, the letter said.
In a report released last year, the mines ministry said
India’s high dependence on imported scrap could be attributed to
the low availability of domestic scrap.
The ministry also said high scrap imports posed a problem
for primary producers of aluminium given a surge in shipments in
recent years.
However, the MRAI said in its letter that removing the
import tariff would promote downstream manufacturing without
adversely impacting primary producers.
India’s leading primary aluminium producers include Vedanta
, Hindalco Industries and state-owned
National Aluminium.
Besides being a resource for domestic producers, scrap has a
vital role in the sector’s decarbonisation efforts, since
recycling aluminium uses 95% less energy than producing metal
from mined bauxite.
“With aluminium consumption expected to reach 8.5-9.0
million metric tons by FY30 and recycled content mandates coming
in, imports are likely to remain crucial unless domestic scrap
collection and urban mining improve significantly,” commodities
consultancy BigMint said.