India's secondary aluminium industry — the foundries, die casters, and secondary ingot producers that consume aluminium scrap to produce casting alloys — is facing a structural supply challenge that has been building for several years but is now reaching a scale that warrants serious policy attention. Domestic aluminium scrap generation, while growing as India's installed base of aluminium-containing products ages and reaches end-of-life, is not growing fast enough to match the rapidly expanding demand from India's secondary aluminium consumers. The gap is being filled by scrap imports — primarily from the United States, Europe, and the Middle East — but import dependence of this scale introduces price exposure, logistics fragility, and strategic vulnerability that the industry and policymakers are increasingly recognising as a problem worth solving. Understanding the scale of the gap, its structural drivers, and the policy interventions that could address it is relevant for every aluminium casting foundry in India whose input cost and supply security depends on the health of the secondary aluminium supply chain.
The Scale of the Gap
India imported approximately 800,000–900,000 tonnes of aluminium scrap in FY2025–26, making it one of the world's largest scrap importers. This compares to domestic scrap generation estimated at 400,000–500,000 tonnes — a gap of roughly 400,000 tonnes that must be sourced internationally. The gap is structural, not cyclical: India's aluminium consumption has grown rapidly over the past decade, but the aluminium embedded in India's economy — in vehicles, buildings, packaging, and consumer goods — has not yet had sufficient time to age into the scrap stream at the volume that consumption growth implies. The lag between consumption and scrap generation is typically 15–25 years for automotive aluminium (the life of a vehicle plus the time to formal recycling) and longer for building and construction applications. India's rapid aluminium consumption growth since 2010 will progressively increase domestic scrap generation through the 2030s and 2040s, but the interim period — the next 10–15 years — will see the import dependence persist and likely widen before the domestic supply curve catches up with demand.
Scrap Collection Infrastructure: The Domestic Bottleneck
Even within India's current scrap generation, actual collection efficiency is significantly below theoretical potential. India's aluminium scrap collection and processing infrastructure is fragmented — dominated by informal kabadiwalas and small scrap traders who collect, sort, and sell scrap through informal channels that lack the consistency of composition, the absence of contamination, and the documentation that formal secondary alloy producers require for quality control. Automotive aluminium scrap — stripped from end-of-life vehicles at dismantlers — is mixed with other metals and contaminants in ways that require sorting and processing before it can be melted into specification alloys. The formal scrap processing sector is thin: India has a handful of large scrap processors capable of delivering sorted, analysed scrap to the specification quality that alloy producers and large foundries need, but the bulk of scrap collection moves through informal channels where specification control is absent. Improving domestic scrap collection and processing infrastructure — through investment in formal scrap yards, end-of-life vehicle dismantling regulations, and incentives for scrap sorting and processing — is the highest-impact intervention to reduce import dependence, and it is an area where the gap between India's current capability and what organised economies achieve is very large.
Import Duty Structure and Its Distortions
India's import duty structure for aluminium scrap has been a source of ongoing industry debate. Aluminium scrap currently attracts a 2.5% basic customs duty, with additional GST at 18% on the assessed value — a duty structure that makes scrap imports viable but adds cost relative to truly duty-free access. More distorting is the inconsistency between the duty treatment of scrap and that of secondary alloy ingot: imported secondary alloy (ADC12 and equivalent grades) attracts higher duties than the scrap from which it is made, creating an incentive for domestic processing that is intentional from a policy perspective, but which also exposes Indian secondary processors to the volatility of global scrap markets without the buffer of diversified processing locations. The practical effect is that large Indian secondary alloy producers — who import scrap and process it domestically — are price-competitive with imported finished alloy under normal conditions, but face margin compression when scrap import prices spike (as they did in mid-2026 when global scrap demand from both China and India competed for limited supply) without the ability to pass the full increase through to foundry customers quickly. A more stable and predictable import duty environment for aluminium scrap, with longer notice periods for any changes, would reduce the planning uncertainty that secondary alloy producers and their foundry customers both face.
The Extended Producer Responsibility Opportunity
Extended Producer Responsibility (EPR) frameworks — which require manufacturers of products containing aluminium to take responsibility for the collection and recycling of end-of-life products — offer a policy route to improving domestic scrap generation and collection without relying purely on market forces. India's EPR framework is most developed in the plastics and electronic waste sectors, but the concept is directly applicable to aluminium in automotive, packaging, and building products. An automotive EPR framework that required vehicle manufacturers to fund end-of-life vehicle collection and aluminium recovery — analogous to the EU's End-of-Life Vehicles Directive — would increase both the volume of automotive aluminium scrap entering formal collection channels and the quality of its sorting and processing, directly reducing India's dependence on imported scrap for its secondary alloy industry. The India Aluminium Association and other industry bodies have been advocating for aluminium-specific EPR provisions in India's recycling policy framework; the potential impact on domestic scrap supply is significant enough to make this a priority lobbying objective for the secondary aluminium industry and its downstream casting customers.