Ahead of the budget, aluminium producers in India 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.
The aluminium producers are asking for parity with the steel industry. 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 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.
India’s demand for aluminium is expected to double to over 7 million tonnes in the next five years. The industry has invested over Rs 1.2 lakh crore to enhance its capacity to 4 million tonnes per annum 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.
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. 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.