Aluminium producers seek 15% import duty in FY17 Budget

Due to various reasons, the share of domestic producers in the market has dropped drastically to 45% in FY15 from 60% in FY11

Battered by surge in imports from China and West Asia, the domestic aluminium producers under the banner of Aluminium Association of India (AAI) have sought an enabling provision of 15 per cent duty on aluminium imports in the Budget for 2016-17.

"We have sought an enabling provision of 15 per cent duty on aluminium imports in the next Union Budget. Before that, we want the import duty to be doubled from five per cent to 10 per cent. We have placed our concerns before the Union finance minister and he has responded positively", said T K Chand, chairman-cum-managing director, National Aluminium Company (Nalco).

 

With the surge of more than 1.5 million tonne per annum (mtpa) import of aluminium to the country, the share of domestic producers in the market has dropped drastically to 45 per cent in 2014-15 from 60 per cent in 2010-2011 due to rising imports from China and West Asian nations.

The performance of the domestic players was also marred by sharp rise in coal prices that have seen spike of 24 per cent in the past three years. Besides, the domestic aluminium producers did not enjoy any government subsidy and players like Vedanta are increasingly getting dependent on alumina imports.

"The AAI is slated to meet the Union finance secretary this week. We will reiterate our concerns on the rising aluminium imports and the need to hike import duty," said Abhijit Pati, chief executive officer (aluminium), Vedanta Ltd.

Globally, demand for aluminium remained sluggish and the sector was passing through the slump cycle. Aluminium metal prices at the London Metal Exchange (LME) were hovering around $1,550 a tonne, below the cost of production by primary producers.

Precipitated by the deceleration in the economy, China was dumping its excess production in the international market, bringing global prices under supply side pressure. Besides, increased availability of metal in the domestic market with no corresponding demand pick-up has kept the domestic prices subdued. This situation is likely to continue for some time.

Global aluminium production in 2014 was about 54.11 million tonnes (mt) while global consumption was about 53.97 mt.

Aluminium imports by the country stood at 1.37 mt in 2013-14 and rose to 1.56 mt in 2014-15.