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Government is considering imposing a minimum import price on aluminium to help stem a surge in cheaper shipments coming from overseas hurting domestic manufacturers.
Revenue Department in the Ministry of Finance is studying the case made by domestic manufacturers led by Vedanta, Nalco, Hindalco and Balco for imposing minimum import price (MIP).
Chief executives of domestic manufacturers met Finance Minister Arun Jaitley on August 18, with their demand for protection from cheaper imports.
They sought expeditious imposition of import restrictions like MIP on aluminium import on lines of the once imposed on steel, sources said.
China, the biggest producer and consumer of metals, is exporting surplus aluminium amid weak domestic demand.
Vedanta CEO Tom Albanese said discussions are on with states and the government to find a long-term solution so that supply chain for the aluminium business is actually a domestic supply chain.
"Right now steel industry has a number of protections from imports but only about 15% of steel comes from imports whereas 50% of aluminium comes from imports in India. So, you have much greater import penetration in the aluminium sector than you have of the steel sector," he told PTI.
He said China has the world's biggest unutilised aluminium production capacity. And considering that China subsidises electricity, "if that Chinese capacity gets turned out with subsidised power, it is likely we will see flood of new imported aluminium coming into Indian market".
India, he said, had bauxite resources to produce aluminium and should use that instead of resorting to imports.
In their representation, the aluminium industry told the revenue department that primary aluminium producers have incurred huge losses of Rs 4,025 crore in 2015-16 fiscal, which was substantially higher than Rs 1,480 crore loss in fiscal year 2014-15.
"The country is facing a situation wherein 50% of its demand is met through imports, particularly from China, where aluminium industry is subsidised by the Chinese government," the industry said.
The increasing imports have rendered less than 60% capacity utilisation of primary producers and creating immense threat for the domestic aluminium industry, they said.
Government entity MECON Ltd is conducting study and analysis of MIP and will come up with final recommendations by September-end.
Aluminium industry told the finance minister that the government has imposed MIP on steel to protect the domestic industry from the impact of global slowdown in commodity prices.
The government had on February 5, fixed MIP of up to USD 752 per tonne on certain steel products for six months. Later on August 4, it extended MIP on 66 steel products till October 4.
On August 9, India also imposed anti-dumping duty on certain hot-rolled steel products from six nations including China and South Korea.
On August 18, it also slapped anti-dumping duty on certain cold-rolled flat steel products from four nations including China and South Korea.
Stating that there has been a surge in imports of aluminium in India, Albanese said, "In the long term it does not make economic or environmental sense for us to be producing aluminium in India with African bauxite. We should be producing aluminium in India with Indian bauxite".
The aluminium producers are working with the government to find a permanent solution "so that our supply chain for the aluminium business is actually a domestic supply chain," he said.
