7 Stocks to Watch if India Removes Aluminium Scrap Import Duty

Synopsis:- A Ministry of Mines working group has recommended scrapping the 2.5 percent customs duty on imported aluminium scrap, a move aimed at fixing a long-standing inverted duty structure that has squeezed domestic recyclers and auto component makers, though several of the stocks tipped as beneficiaries have already rallied hard in anticipation, leaving less room for surprise than the headline suggests.

A joint working group under the Ministry of Mines has reached internal consensus on scrapping the 2.5 percent basic customs duty currently levied on imported aluminium scrap, with the recommendation set to move to the Finance Ministry for a final call. 

The trigger is a classic inverted duty problem: domestic recyclers and downstream manufacturers pay duty on the scrap they import as raw material, while finished aluminium products flow in duty-free or near duty-free from ASEAN countries under existing free trade agreements. That asymmetry has made it harder for Indian foundries and alloy makers to compete even in their own domestic market.

Global aluminium prices on the London Metal Exchange have climbed from a 2,300 to 2,600 dollar per tonne range in 2024 to above 3,800 dollars per tonne by mid-2026, a jump largely attributed to West Asian supply disruptions, and scrap prices have moved up 20 to 25 percent in tandem. 

With India’s per-capita aluminium consumption still around 2.5 kilograms against a global average of 11 kilograms, the country simply does not generate enough domestic scrap to meet demand and imports 1.6 to 1.8 million tonnes annually, a figure expected to rise toward 2 million tonnes this year. 

Removing the duty would eliminate a compounding, non-recoverable cost of roughly 2.75 percent once the Social Welfare Surcharge is factored in, a meaningful swing for businesses that already operate on thin processing margins.

The Recyclers

Baheti Recycling Industries, a pure-play aluminium recycler, is the most direct beneficiary on paper since its entire business model runs on importing scrap and converting it into alloys and ingots. But the stock has already priced in a good deal of optimism: shares were trading near Rs. 727.85, up roughly 29 percent over the past year and 19 percent in the last month alone, at a P/E near 28. 

A one-month rally of that size for a company with a market capitalisation of under Rs. 800 crore suggests the market had already caught wind of this policy direction before the formal recommendation surfaced, which matters for anyone considering entering now expecting a fresh re-rating.

Gravita India, better known historically for lead recycling but expanding aggressively into aluminium, presents a similar picture. The stock was trading around Rs. 1,770, with a P/E of 34.87, and a market capitalization above Rs. 13,000 crore. 

Gravita’s scale and diversification across lead, aluminium, plastics, and copper give it more insulation than a single-metal player like Baheti, and its recent quarter showed aluminium segment profit still modest relative to its dominant lead business, meaning the duty change is a genuine tailwind rather than the primary earnings driver.

Auto Component Makers

The automotive sector is the largest consumer of secondary aluminium alloys, since components like engine blocks, transmission cases, and EV battery enclosures are typically cast from recycled ADC12 or LM6 grade alloy rather than primary metal. 

Endurance Technologies, one of India’s largest die-casting players for two-wheeler and passenger vehicle components, and Alicon Castalloy, which specialises in lightweight aluminium castings for auto and EV applications, both stand to gain from cheaper input costs if the duty removal goes through. 

The mechanism here is more indirect than for the recyclers themselves, working through lower alloy procurement costs rather than a direct tariff saving, so any margin benefit is likely to show up over one or two quarters rather than immediately.

Primary Producers

Hindalco Industries, National Aluminium Company, and Vedanta lobbied for the opposite outcome, a uniform 15 percent flat duty across the entire aluminium value chain to protect an estimated Rs. 3 lakh crore in domestic smelting capacity built out over the past decade. 

The government siding with downstream recyclers instead is a clear policy setback for this group. That said, the practical impact on their earnings is limited in the near term, since primary aluminium prices above 3,800 dollars per tonne are already delivering exceptionally strong realisations regardless of scrap policy. The more durable effect for these companies may be strategic: expect a sharper pivot toward high-purity, value-added alloys and specialty products where they don’t compete directly with scrap-based recyclers.

What Investors Should Watch

The most important variable here isn’t which stocks are named as beneficiaries, since that list is fairly intuitive once the duty structure is understood. It’s whether the Finance Ministry formalises the recommendation into an actual customs notification, and on what timeline. 

Working group recommendations in India routinely take months to clear Finance Ministry review, and the primary producer lobby has not backed down, meaning some further wrangling over quality control norms under the Bureau of Indian Standards is likely before implementation. 

Given that Baheti’s valuation already reflects a sharp re-rating, and Gravita’s aluminium exposure remains a smaller part of a diversified business, the more asymmetric opportunity for patient investors may lie in the auto component names, where the policy benefit hasn’t yet been the primary driver of the stock price.

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