Ports and BCD: Trade Bodies Clash Over India's 2.5% Aluminium Scrap Import Duty

What the fight is about

India charges a 2.5% Basic Customs Duty (BCD) on imported aluminium scrap, under HS 7602. That makes aluminium scrap the only major base metal scrap that still carries an import duty in India. The 2025-26 Budget exempted copper, zinc and lead scrap from duty, but aluminium scrap was left out.

Two trade bodies are now pulling in opposite directions, and both have gone to the top. The Material Recycling Association of India (MRAI) has petitioned the Prime Minister's Office to abolish the 2.5% duty. The Aluminium Association of India (AAI), which speaks for primary producers, has asked the Ministry of Finance to keep the duty until BIS quality standards for scrap are notified, and then to raise it to 7.5% on lower grade scrap, Grades 3 to 7.

Nothing has been decided yet. This article sets out what each side wants, what the numbers say, and what an importer or recycler should do while the decision is pending.

Who wants what

MRAI, speaking for the recyclers: scrap is their raw material, not a finished product. The association says the 2.5% duty raises the cost of feedstock for secondary smelters, most of which are small and medium enterprises, and that removing it would lower costs and help India recycle more aluminium at home instead of importing primary metal.

AAI, speaking for the primary producers: the association says duty-free scrap undercuts domestic primary aluminium, and that scrap quality needs BIS standards first. Its ask is to hold the 2.5% duty until those standards are notified, then move to 7.5% on Grades 3 to 7, the lower grades.

What the numbers say

All figures below are for FY26 unless a different year is stated, so they can be compared with each other.

India's secondary aluminium sector has grown from 0.85 million tonnes in FY16 to nearly 2.2 million tonnes in FY26. Recycled metal now meets about 35% of domestic aluminium consumption. The sector supports nearly 7 lakh direct and indirect jobs across sorting, processing and remelting. Scrap imports reached 2,028 thousand tonnes in FY26, and the foreign exchange outgo on those imports was Rs 40,203 crore.

Domestic scrap collection cannot yet fill the gap. Per capita aluminium consumption in India is 3.3 kg, against a global average of 16 kg, so the pool of old scrap at home is small. The recycling association estimates the local scrap ecosystem will need another 15 to 20 years to mature. Until then, imports remain essential feedstock for secondary smelters.

Primary producers, by contrast, get protection of 7.5% BCD on imported primary metal. That gap, 2.5% on scrap against 7.5% on primary metal, is at the centre of the argument.

Where the scrap comes from, and what is changing there

The measures below are export measures at the origin, not Indian duty. India's duty on aluminium scrap is 2.5% BCD, as stated above.

The shares in the table are the figures in the draft, with the remaining 38% shown as all other origins so the shares add to 100%. The GCC is shown as one row because the UAE and Saudi Arabia are both GCC members. Counting them as two separate 20% shares would double count the region.

Asian manufacturing hubs such as Thailand, Malaysia, Indonesia, Japan and South Korea allow duty-free imports of aluminium scrap. Some of those countries export finished aluminium alloys to India at zero duty under free trade agreements, which leaves Indian secondary smelters facing an inverted duty structure: they pay duty on their raw material while finished alloy comes in free.

What to do now

This is a policy decision that has not yet been made, so the practical step is to prepare for all three outcomes. If you import or recycle aluminium scrap, do these things:

1. Check the grade of every lot you buy, and keep the HS 7602 paperwork in order, so you know which lots would be hit if duty rises to 7.5% on Grades 3 to 7.
2. Model your landed cost at 2.5% BCD, and again at 7.5% for lower grade scrap, so a decision does not catch your margins by surprise.
3. Spread your origin risk. The EU supplies 22% of India's scrap, the US about 20% and the GCC about 20%, and all three regions are tightening export rules in some form.
4. Watch for two announcements: a decision from the Prime Minister's Office or the Ministry of Finance on the duty, and the notification of BIS quality standards for scrap.
5. Keep your quality records. If BIS standards are notified, graded and documented scrap will be easier to buy, sell and clear.

The takeaway is simple: the 2.5% duty is still in force, it could be removed, and it could rise to 7.5% on lower grades. Plan your buying and your pricing for all three, and do not treat any of them as decided.