Indian Aluminum Castings Export Trends 2026 CBAM and FTA Impact

The Indian aluminum alloy casting industry stands at a critical juncture in 2026. While domestic production remains robust, exporters are navigating a complex landscape defined by the European Union’s Carbon Border Adjustment Mechanism (CBAM) and evolving Free Trade Agreements (FTAs).

Below is a comprehensive analysis of the competitiveness, regional dynamics, and scrap projections for the industry.

1. Export Competitiveness: The CBAM and FTA Impact

Carbon Border Adjustment Mechanism (CBAM)

As of January 1, 2026, the EU has transitioned into the definitive phase of CBAM.

• The Challenge: Indian aluminum exports now face a "carbon tax" that can increase costs by 15–22%. Since much of India's primary aluminum is produced via coal-fired power, the carbon intensity is high compared to European counterparts.
• The Shift: To remain competitive, manufacturers are shifting toward secondary aluminum (recycled scrap), which consumes 95% less energy and significantly lowers the carbon footprint, potentially exempting parts of the value chain from heavy CBAM levies.

Free Trade Agreements (FTAs)

India’s trade strategy involves leveraging CEPA (UAE, South Korea) and AITIGA (ASEAN) to source raw materials and access new markets.

Merits and Demerits of Key FTAs

| Agreement | Merits for Alloy Casting | Demerits/Challenges |

| :--- | :--- | :--- |

| India-UAE CEPA | Duty-free access to high-quality primary aluminum; zero-duty exports for finished castings. | Risks of UAE becoming a transshipment hub for third-country metals. |

| ASEAN-India (AITIGA) | Lower tariffs on specialized alloy imports from Malaysia and Thailand. | Inverted Duty Structure: High duty on raw scrap (2.5%+) vs. zero duty on finished goods from ASEAN. |

| India-South Korea CEPA | Strong demand for automotive castings in the Korean EV supply chain. | Stringent "Rules of Origin" (ROO) requirements are difficult for small foundries to document. |

2. Regional SWOT Analysis (India 2026)

The industry is geographically clustered, with each region offering distinct advantages.