AAI recommends increase in import duty on aluminium
Due to lack of policy support, 23 lakh tonnes of aluminium (ie, 58% of India's demand) were imported in India in FY19, resulting in a forex outgo of Rs 38,000 crore
In the wake of alarming rise in imports, Aluminium Association of India, in its recommendation to the Government for Union Budget 2019-20, has suggested increase in import duty on aluminium and its products to protect domestic industry.
Among core metals, aluminium’s importance is next to steel. Yet, over the last three years, policy measures are being developed and introduced to protect the domestic steel industry. Some of the special provisions extended are anti-dumping duties for Chinese imports, safeguard duties of 10-20 per cent levied on steel imports, and an increase in basic custom duty of minimum 10 per cent on all steel products. Yet aluminium industry continues to suffer due to the lack of such measures.
Against this backdrop, the Aluminium Association of India (AAI) has reached out to the government to provide some relief in the form of increasing duty on primary aluminium products from 7.5 per cent to 10 per cent and that on downstream products in range of 10 per cent to 12.5 per cent, with the same duty on primary aluminium and scrap as in the case of all other non-ferrous metals. According to AAI, the duty parity also needs to be maintained for secondary aluminium products to protect interests of both primary and secondary segments of the industry.
India’s demand for aluminium is expected to double to over 7 million tonnes in next five years, and as such the industry has invested over Rs 1.2 lakh crores to enhance capacity to 4 MTPA to cater to increasing demand. The sector is also one of the largest job creators with more than 8 lakh direct and indirect employment. However, experts feel that the aluminium industry has not received the government’s support to curtail import.
Rahul Sharma, Vice President, Aluminium Association of India, said, “Aluminium, the green metal, is a metal of strategic importance for the country, along with steel, and plays a vital role in national security and nation building. In the last few years, steel has received policy support from the Government that has enabled the industry to immune itself from global market volatility and reduce dependence on import and excess supplies. Government support has resulted in a drop of steel imports by 21 per cent in last 3 years. In contrast, a lack of similar policy support pushed the aluminium industry to register highest ever aluminium import of 23 lakh tonnes in FY19, that is 58 per cent of India's demand, resulting in a forex outgo of Rs 38,000 crore. In the current circumstances, Indian aluminium industry requires the government to extend policy measures in line with what has been extended to steel.”
Current volatility of aluminium LME prices crashed by $550/MT in last one year and the restrictive measures taken by China, the US and other key markets to protect their indigenous markets from imports are making India more vulnerable as a dumping ground for primary metal, scrap and secondary products, thereby adversely affecting the competitiveness of the domestic industry. “Hence, immediate measures like increased import duty on primary aluminum, scrap and downstream aluminium products are required along with rationalisation of input costs of critical raw material of aluminium value chain to help domestic industry retain competitiveness,” added Rahul Sharma.