Aluminium producers seek 10% duty on imports

Primary aluminium producers have urged the Centre to increase the import duty on primary aluminium and aluminium scrap to 10 per cent and reduce the customs duty on critical raw materials, such as calcined and raw petroleum coke, caustic soda and alumina.

They also want to eliminate the GST compensation cess of ₹400/tonne on coal to support highly power-intensive industries like aluminium.

Challenging times

In a representation made through the Aluminium Association of India ahead of the Budget, the producers said these measures are absolutely necessary to battle current challenges being faced by the industry in sustaining the share of the domestic aluminium demand — which is today being imploded with imported aluminium — as well as to make Indian aluminium more competitive in global markets to retain and boost exports.

The Indian aluminium industry is going through a challenging phase and is under immense threat by rising imports, declining domestic market share, increasing production and logistics costs. These challenges have been further compounded by the Covid-19 pandemic, which has adversely impacted the domestic demand for aluminium, the association said.

At the same time, the industry is not able to compete effectively in the global markets as the burden of Central and state taxes and levies amount to 15 per cent of aluminium production cost, it said.

Imploding imports

Though Indian has sufficient domestic capacity of 4 mtpa (million tonnes per annum) to cater to the country’s aluminium demand of around 4 mtpa, 60 per cent of India’s demand is being met through imports, resulting in declining domestic market share from 60 per ent in FY11 to 40 per cent in FY20.

Total imports, including scrap, for the FY11-20 period has grown at a CAGR of 10 per cent. Between FY14 and FY19, imports from non-FTA (free-trade agreement)countries grew at 11 per cent and from FTA countries at 23 per cent.

Scrap saga

The US imposed 10 per cent tariffs on aluminium imports, while China imposed 25 per cent duty on aluminium scrap imports from US. This led to dumping of aluminium scrap into India.

Due to lack of an organised domestic scrap-recycling industry, post the Chinese tariffs on scrap, India is at severe threat as US diverted large volume of scrap to India, since EU and other developed countries have stringent standards for scrap, the association said.