AAI calls on govt. support for custom duty cutback on critical raw materials in the upcoming Union Budget

To boost cost competitiveness in the sector, the domestic aluminium industry has sought a decrease in basic customs duty and a correction in the inverted duty structure on important raw materials such as pet coke, caustic soda, aluminium fluoride, and alumina. The Aluminium Association of India (AAI), on behalf of the local aluminium sector, has requested quick government help in the next Union Budget 2022-23.

According to the AAI's pre-budget projections; it has also proposed an increase in the basic customs tax rate for aluminium and products from 10% to 15%, in line with the steel industry.

It was also asked that the basic customs duty on raw aluminium is raised from 7.5% to 10%, the duty on aluminium scrap be raised from 2.5% to 10%, and that the duty on downstream aluminium products is raised from 7.5% to 10%.

Increased imports of aluminium and scrap are posing a serious threat to the primary aluminium sector. Scrap's percentage of total imports has risen from 52% in FY16 to 71% in the first half of FY22, resulting in a currency outflow of USD 2 billion (Rs 15,000 crore) every year.

To stimulate local recycling of indigenous scrap and foster a circular economy, the AAI has recommended raising the import tariff on aluminium scrap to the same level as primary aluminium metal (proposed 10%).

Various ministries and government think tanks, including NITI Aayog, mines ministry, coal ministry, and electricity ministry, have advocated that the high coal cess be rationalised to sustain the sector.

The GST Compensation Cess on coal was only supposed to be imposed for the first five years of the GST administration, from July 1, 2017, to July 1, 2022.