Primary aluminium players seek import duty hike on premium products to 10%

In a bid to discourage cheap imports into the country, the ministry of mines has made written recommendations to the ministry of finance for raising import duty on primary aluminium products to 10 per cent, industry sources said on Friday.

Currently, primary aluminium products, such ingots and billets, carry an import duty of 7.5 per cent.

“Earlier this week, private players of the domestic aluminium industry have approached the finance ministry for an import duty hike via the ministry of mines,” sources close to the development told Business Standard.

Hindalco Industries and Anil Agarwal-led Vedanta Limited are private aluminium producers in the domestic market. National Aluminium Company (NALCO) is the state-owned producer.

In the current financial year, the companies together are expected to produce about 4.2 million tonnes of primary aluminium, said industry officials.

The move (to seek duty hike), however, is expected to adversely impact the secondary aluminium industry that relies on domestic producers to procure their material.

“Only 60,000-70,000 tonnes of primary aluminium gets imported, of which majority is advance export entailment. Where is the question of injury to the domestic aluminium sector for which primary producers are asking for protection via duty hike?” said Anil Agarwal, patron at Aluminium Secondary Manufacturers Association (ASMA).

ASMA has close to 3,500 micro, small and medium enterprises (MSMEs) — that are secondary producers — as members.

“We (secondary producers) are already buying primary aluminium at 14 per cent higher rates than the domestic primary market price to match the landed price of the material that is imported. Now, if duty is revised to 10 per cent, there will be an additional outgo for us,” added Agarwal.

Hindalco Industries did not respond to queries sent till the time of going to press.

Of the 4.2 million tonnes usually produced by primary aluminium players, about 0.5 million tonnes is exported by NALCO and close to 2.1 million tonnes is exported by the two private players, said industry officials.

“The increased outgo (if duty hike happens) for the secondary aluminium producers would be about Rs 4,000 crore. This is huge given the small players that this segment has,” said Agarwal.

Also, domestic primary aluminium producers continue to face coal crunch issues along with rail rake shortage for transportation of the fuel.