India may be the world’s second-largest producer of primary aluminium, but for thousands of small manufacturers further down the value chain, access to domestically produced metal at globally competitive prices remains a pressing concern. The issue has returned to the centre of India’s aluminium policy debate, with import-parity pricing and the effective 8.25 per cent import levy on primary aluminium increasingly being cited by downstream manufacturers as factors raising their raw material costs.
The concern is growing as primary aluminium can account for as much as 80 per cent of the production cost of downstream manufacturers. For micro, small and medium enterprises (MSMEs) operating on thinner margins, even relatively small movements in the cost of metal can therefore have an outsized effect on profitability, capacity utilisation and competitiveness.
A recent report highlighted the pressure faced by smaller aluminium manufacturers because domestic primary aluminium prices are linked to import-parity pricing. Under this mechanism, the domestic price can reflect the international benchmark price of aluminium together with costs associated with importing the metal into India, even when the material itself is produced domestically.
India currently levies a 7.5 per cent Basic Customs Duty on primary aluminium. With a 0.75 per cent Social Welfare Surcharge, the effective import levy reaches approximately 8.25 per cent.
The downstream industry’s argument is that this tariff does more than make imported primary aluminium expensive. Since domestic aluminium prices are benchmarked against international prices and can be aligned with import-parity levels, the tariff can indirectly influence the price paid for domestically produced metal.
The Federation of All India Aluminium Utensils Manufacturers (FAIAUM) and the Cable and Conductor Manufacturers Association of India (CACMAI) recently brought the issue directly before the Ministry of Mines. In a joint representation submitted on July 14, 2026, the two associations sought rationalisation of the effective 8.25 per cent Customs levy on primary aluminium.
Their concern is particularly relevant to aluminium-intensive manufacturing segments such as electrical conductors, cables, utensils, extrusions and other fabricated aluminium products, where the cost of metal constitutes a substantial share of total manufacturing expenditure.
The Aluminium Secondary Manufacturers Association (ASMA) and other downstream stakeholders have also repeatedly sought policy intervention over the tariff structure.