Arguing that growing imports of scrap is threatening the primary aluminium industry, an umbrella industry body has urged the finance minister to raise basic customs duty on aluminium scrap to 10% from 2.5% now.
In a memorandum, Aluminium Association of India (AAI) said the duty increase will encourage recycling of domestic scrap and restrict its growing imports. The share of scrap in total imports of aluminium increased from 52% in FY16 to 66% in FY21, resulting in around Rs 15,000 crore worth forex outgo. India imported a little more than 2 million tonne aluminium last fiscal.
“Currently custom duty on primary aluminium is 7.5% and aluminium scrap is only 2.5%. This is the reason why despite having significant presence of primary aluminium capacity and potential to generate sufficient domestic scrap, India’s consumption of scrap is 100% import-dependent. The way forward is to increase custom duty on aluminium scrap from 2.5% to 10%,” it said.
AAI said China’s renewed measures to restrict scrap imports is leading to greater inflow of scrap into India. China imposed 25% duty on aluminium scrap imports from the US and classified aluminium scrap in restricted import list from July 2019, with plans to completely ban all scrap and waste imports.
“Post that the share of import from the US in China’s total aluminium scrap imports has declined from 53% in 2017 to just 16% in 2019. India has overtaken China as world’s largest aluminium scrap importer due to the Chinese measures,” it said. As a result, the entire global scrap chain is shifted to India in the absence of any quality or BIS standards for scrap recycling, usage and imports in the country. The US is diverting large volume of scrap to India, since the European Union and other developed countries have stringent standards for scrap. The import from the US as share of India’s total scrap imports increased from 8% in FY16 to 24% in FY21.