You are here: Home » PTI Stories » National » News
Business Standard

Aluminium producers' seek import duty hike ahead of budget

Business Finance

Press Trust of India  |  Bhubaneswar 

Ahead of the budget, aluminium producers have sought steps from the government to hike import duty on primary aluminum, scrap and downstream products and rationalise costs of raw materials.

Industry bodies such as the Aluminium Association of India (AAI) and FICCI have informed the government that the aluminium sector of the country is going through a challenging phase and is under immense threat by rising imports, declining domestic market share, rising production and logistics costs.

Moreover, non-competitive energy costs and acute coal shortage for the industry have adversely hit the sustainability of the aluminium industry, Rahul Sharma, co- chairman of FICCI Committee on Mining and Minerals, said in a press statement.

Noting that aluminiums importance is next to that of steel, but policy measures are being developed and introduced to protect the domestic steel industry in the last three years, he said.

Some of the special provisions extended to the steel industry are anti-dumping duties for Chinese imports, safeguard duties of 10-20 per cent levied on steel imports, and a minimum 10 per cent increase in the basic customs duty on all steel products.

The aluminium industry continues to suffer due to the lack of such measures, said Sharma, also an active member of the AAI.

The AAI has recently written to the Ministry of Mines to provide some relief in the form of increasing basic customs duty on aluminium products from 10 per cent to 12.5 per cent and reducing basic customs duty and correction of inverted duty structure on raw materials.

The FICCI has also conveyed similar recommendations to the government.

Stating that India's demand for aluminium is expected to double to over 7 million tonnes in the next five years, Sharma said, the industry has invested over Rs 1.2 lakh crore to enhance its capacity to 4 MTPA to cater to the increasing demand.

The sector is also one of the largest job creators with more than 8 lakh direct and indirect employment.

In the last few years, the steel industry has received policy support from the government that has enabled the sector to immune itself from global market volatility and reduce dependence on import and excess supplies.

The government support has resulted in a drop of steel imports by 21 per cent in last three years, he said.

In contrast, a lack of similar policy support pushed the aluminium industry to post highest ever aluminium import of 23 lakh tonnes in FY19, 58 per cent of India's demand, resulting in a forex outgo of Rs 38,000 crore, Sharma said.

In the current circumstances, Indian aluminium industry requires the government to extend policy measures in line with what has been extended to the steel industry, he said.

Restrictive measures by China, USA and others to protect their indigenous markets from imports are making India more vulnerable as a dumping ground for primary metal, scrap and secondary products, adversely affecting the competitiveness of the domestic industry, he said.

"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, Sharma said.

AAI in its communication to the Centre said the role of aluminium in energy security, infrastructure, defense, aerospace, automobile, electricity, packaging and consumer products makes it a sector of strategic importance.

However, the cost of production of aluminium metal in India has substantially increased over past 3-4 years due to rising cost of raw materials, increase in various duties, cess and high logistic costs.

Among the largest aluminium producers like China, Canada, Russia, Middle East and Norway, India has the highest cost of production, which can be attributed to high power cost due to increasing coal prices, high cess on coal, electricity duty and logistics.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Sun, June 16 2019. 16:55 IST