India's alumina producers seeking anti-dumping duty exemption on caustic soda

India's domestic aluminium producers have been long demanding for an import duty protection for aluminium to which the government has responded in the affirmative only very recently. Now, the likes of Vedanta Ltd., National aluminium Company (Nalco), and Hindalco have again come up with the request to exempt the domestic alumina manufacturers from anti-dumping duties on caustic soda, a critical raw material and cost component of alumina production, reported InfraCircle.

“The challenges faced by the aluminium industry are compounded by an unfavourable duty structure. Aluminium is imported attracting customs duty of 7.5per cent, whereas duty on raw materials in manufacturing alumina attracts duty of equal to or more than 7.5per cent. The challenges of the industry are further compounded by the imposition of anti-dumping duty on caustic soda of which India is a net importer,” wrote the Aluminium Association of India in a recent letter to mines secretary Balvinder Kumar.

An anti-dumping duty is a tariff that a domestic government imposes on foreign imports that it believes are priced at lower rates in their corresponding countries of origin and might expose the domestic industry to unfair global trade practices. In India, custom duty on caustic duty is 7.5 per cent, while anti-dumping duty on imports from countries such as China, Saudi Arabia, Iran, Korea, Taiwan, and US ranges between $8.75-$133.6 per million tonne.


“The alumina industry though consumes only 13per cent of country’s total consumption of caustic soda, but is a bulk consumer. Domestic caustic soda industry is not able to supply the requirement of the alumina industry due to quantity, infrastructure and logistical constraints. Hence, the industry has no other option but to import it,” the letter noted.

Majority of India's caustic soda is produced in the western part of the country whereas most of the smelters are located in the country's eastern region; so logistics constitutes a significant part of the cost of production. Given the current state of condition where primary aluminium makers are being faced by the challenge of rising imports of cheap aluminium and aluminium products from China and the Middle East, raw material cost reduction stands as the single most priority area.

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India's current caustic soda production is estimated at 2.87 million tonnes, while the domestic market volume is 3.36 million tonnes. In order to bridge the demand-supply gap, primary aluminium producers have to resort to alumina imports.

In August this year, finance ministry had approved a one-year validity extension of the existing anti-dumping duty on caustic soda imports from Taiwan (Chinese Taipei).