Aluminium’s strategic moment: Global economies act when India hesitates

In an attempt to rethink how global economies will function in a carbon-constrained future, industrial strategies are being reshaped around decarbonisation, clean energy, recyclability and the security of the critical raw materials. This recalibration is largely driven by the growing recognition of accessing strategic metals that will further define the financial position and the national security in the decades ahead.

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Among these materials, aluminium has emerged as the decisive driver for the low-carbon transition journey. Since it brings a rare combination of attributes, abundant availability, light weight, durability and recyclability, this metal becomes indispensable to renewable energy systems, electric mobility, defence platforms and resilient infrastructure. According to the International Aluminium Institute’s assessment of greenhouse gas pathways to 2050, countries that treat aluminium as a strategic resource are positioning themselves to lead the next phase of renewable energy expansion and low-carbon transport.

This strategic shift is already visible in policy decisions taken by major economies. The United States, the European Union and the United Kingdom have all classified aluminium, or its primary input bauxite, as a critical metal. Protective measures have followed. The EU’s Carbon Border Adjustment Mechanism and the US’s 50 per cent tariff under Section 232 are designed to secure long-term supply, shield domestic industries from carbon-intensive imports and reinforce national security interests tied to green energy and defence manufacturing.

Despite having ambitions, India is yet to fully capitalise on aluminium’s strategic value, which is somewhat thwarting the acceleration of India’s growth trajectory.

India now stands at a defining moment in its economic and environmental journey. Ranked as the world’s fourth-largest economy, the country has bound itself to the Panchamrit set of five climate commitments to be achieved by 2030, while simultaneously charting an ambitious course towards a USD 30 trillion economy by 2047. Alongside these goals, India is steadily emerging as a centre for sustainable manufacturing and responsible consumption, identified by a deep pool of skilled talent and one of the largest domestic markets anywhere.

Yet aluminium and bauxite remain absent from the list of materials covered by the National Critical Mineral Mission, the policy framework guiding India’s approach to strategic resources. This omission comes at the juncture when most companies are tightening controls in the name of national security, while justifying trade barriers and similarly protecting domestic supply chains.

India holds the world’s sixth-largest bauxite reserves and is home to some of the most efficient aluminium producers globally. In spite of these rich reserves, the country is more dependent on imports, especially low-grade aluminium scrap. Import volumes are also rising, but most of the time without adequate regulatory supervision. Consequently, Sub-standard scrap is occupying the domestic supply chain, thus distorting markets and impacting local capacity expansion through dumping and uneven tariff structures.

Unregulated scrap inflows also carry environmental and technical risks. Poor-quality material increases processing emissions, weakens the recycling ecosystem and compromises the reliability of aluminium used in high-value green applications. Over time, these structural weaknesses threaten to erode India’s ambitions for a circular economy, weaken its green transition and reduce long-term industrial resilience.

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Strengthening policy frameworks could reverse this trajectory. A more robust National Circular Economy architecture—built around efficient scrap collection, traceability and expanded domestic recycling capacity—would reduce emissions, conserve resources and enhance environmental safeguards. For aluminium in particular, this would help shield the sector from the growing influx of contaminated and low-grade scrap.

At this critical juncture, the introduction of stringent BIS scrap-quality standards aligned with global benchmarks has become urgent. Such standards would ensure that only environmentally compliant, high-grade material enters India’s recycling stream, reinforcing both sustainability and product integrity.

Trade policy could also play a decisive role. A calibrated customs duty, in the region of 15 per cent on aluminium imports, including scrap, would bring India closer to international practice. Measures comparable to the EU’s CBAM or the US’s Section 232 tariffs could deter dumping, level the playing field for domestic producers and stimulate investment. According to industry veterans, a stronger protective framework could attract INR 20,000 million (USD 240 billion) in fresh domestic investment across recycling, green smelting, value-added manufacturing and remanufacturing.

The rewards of building a comprehensive domestic aluminium ecosystem extend far beyond trade balances. Aluminium would no longer be viewed simply as an industrial input, but as a strategic asset, one capable of cushioning the economy against geopolitical supply shocks while supporting energy security and mobility transitions. A mature circular aluminium economy could generate a USD 2 trillion market by 2050 and create up to ten million jobs nationwide.

More importantly, it would allow India to convert its natural resource endowment into enduring economic and environmental value, rather than surrendering market share to overseas producers operating under weaker sustainability norms.

India is now at a difficult juncture where today’s decision will determine whether aluminium becomes a foundation of the country’s next industrial transformation or it will fade as a missed opportunity. If not decided at the right time, the aluminium boom might turn into a missed opportunity, diluted by unchecked imports and environmental compromise. However, a future-forward policy that’s focused on sustainability and quality control will ensure that the aluminium supports will support infrastructural growth and create a more resilient, equitable and future-ready economy.

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