GTRI stated on Thursday that India’s current tariff framework has created significant distortions across the aluminium value chain. According to the think tank, these policies have encouraged exports of primary aluminium, increased raw material costs for domestic manufacturers, and raised dependence on imported finished aluminium products.
Aluminium, described as a foundational material for modern industrial economies, plays a critical role in sectors such as power transmission, renewable energy, electric vehicles, railways, construction, packaging, aerospace, defence, and a wide range of consumer and engineering industries.
As India expands investments in infrastructure, clean energy, advanced manufacturing, and electric mobility, demand for aluminium and aluminium-based products is projected to rise sharply. GTRI noted that India is well positioned to benefit from this growth due to abundant bauxite reserves, integrated refining and smelting capacity, and access to relatively low-cost power.
However, GTRI Founder Ajay Srivastava said India is not fully capturing the economic value of its aluminium resources. He observed that while primary aluminium production has expanded, downstream industries that convert aluminium into higher-value finished products are under increasing cost pressure.
Srivastava explained that current tariff policies allow primary producers to earn high margins, while downstream manufacturers face elevated input costs and competition from low-duty imports of finished aluminium products. He said this structure has led to rising exports of primary aluminium and increased imports of value-added aluminium goods, weakening domestic value addition, reducing manufacturing competitiveness, and limiting investment, employment, and export potential.
He contrasted India’s approach with China’s industrial strategy, stating that China treats aluminium as a strategic input, restricts exports of primary metal, and channels production into domestic manufacturing. According to him, this approach has enabled China to build globally competitive downstream industries, expand exports, and generate large-scale manufacturing employment.
GTRI has recommended that India align its policy framework similarly by removing the 7.5 per cent duty on unwrought aluminium to ensure globally competitive input costs for domestic manufacturers. It further suggested that duties on raw materials and intermediates should remain lower than those on finished products to support value addition within the country.
The think tank also recommended a review of free trade agreement concessions that allow finished aluminium products to enter India at low or zero duty, arguing that such provisions undermine domestic industry competitiveness. Additionally, it proposed a 20 per cent export duty on aluminium metal to discourage export of primary aluminium and encourage domestic processing, citing China’s 30 per cent export duty on aluminium ingots as a comparative example.
India currently exports a significant share of aluminium in primary form rather than converting it into higher-value products. In the financial year 2025–26, India exported approximately 7 billion US dollars worth of aluminium and aluminium products, of which 61.4 per cent consisted of aluminium metal and only 38.6 per cent comprised finished goods.
In contrast, China exported 42.5 billion US dollars worth of aluminium products in 2025–26, with 97.2 per cent consisting of value-added products and only 2.8 per cent in the form of aluminium metal, highlighting a stark difference in industrial strategy and value addition outcomes.
The analysis underscores growing concerns over India’s tariff structure and its impact on industrial competitiveness, as policymakers face increasing pressure to realign trade and manufacturing incentives toward higher domestic value addition.
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