Govt imposes 35% safeguard duty on aluminium products

The government has imposed up to 35 per cent safeguard duty on specified aluminium products to protect domestic industry, dominated by players like Hindalco and Vedanta, against cheap imports from China.

Safeguard duty is a temporary protectionist measure which is brought in for a certain timeframe to avert any damage to the domestic industry from cheap imports.

"We have imposed a safeguard duty of 22 per cent on aluminium foil and 35 per cent on aluminium sheets for 200 days against China," a senior government official said.

While aluminium sheets are primarily used by sectors such as auto and construction, aluminium foil is widely consumed by the packaging industry. Hindalco and Vedanta are the main producers of the two aluminium variants.

"The initiative by the government to impose safeguard duty on aluminium foils and sheets is quite important for the domestic industry," Vedanta group firm Balco's CEO Gunjan Gupta said.

The Directorate General of Safeguards, Customs and Central Excise, which investigates problems pertaining to cheap imports, had in January initiated a probe into cheap arrival of aluminium products into India.

The aluminium producers led by Aditya Birla Group flagship company Hindalco had filed a petition for levying the duty against the neighbouring country.

Hindalco constitutes over 70 per cent of the total domestic production of flat-rolled aluminium products and more than 55 per cent of aluminium foil.

According to domestic producers, import of the two aluminium products have shown an increasing trend in absolute terms from China, hitting their sales volumes.

In the petition, the producers said there has been a decline in the per month average production and capacity utilisation of domestic companies during the April-December period of the current fiscal.

As against a production of 212,000 tonnes in 2007-08, the domestic volumes of flat-rolled aluminium products dipped to 138,000 tonnes during April-December period.

Similarly, the capacity utilisation of the smelters dipped to 90.3 per cent in April-December from over 103 per cent in the corresponding period last fiscal.