AAI pitches for a safeguard duty in meeting with India's Revenue Secretary

Facing the twin onslaught of galloping imports and meltdown in global prices, the domestic aluminium industry on Wednesday made a strong pitch for a safeguard duty breather in its meeting with revenue secretary even as its demand for doubling import duty to 10% remains unanswered.

Sources said representatives from all three major domestic aluminium producers - Vedanta, Hindalco and Nalco - under the aegis of Aluminium Association of India (AAI) met revenue secretary Hasmukh Adhia and appraised him that since 55% of domestic demand is being met through imports, nearly half of their 2.1 MT capacity is lying unutilised.

“The prices of the metal have also crashed. Since April 2011, aluminium prices at London Metal Exchange (LME) have dropped by 42% from $2,623/tonne to $1,540/tonne in August this year, but the production cost remains the same. The domestic industry is hardly making any money, but reeling under a mammoth debt burden of R70,000 crore. Government needs to step in to save the industry from bleeding,” said an industry source.

AAI representatives have also told Adhia that due to the prevailing conditions, Vedanta was forced to shut down its rolling mill at Balco and de-rated its Lanjigarh refinery operations by half, affecting more than 1,500 jobs.

With domestic demand cooling off, Chinese firms have now increasingly looking at India as a a convenient destination to off-load their surplus aluminium. Industry sources said unless the government steps in, their INR 1.4 lakh crore investment to ramp up cumulative capacity to 4.1 million tonnes per annum (MTPA) from current 2 MTPA stands jeopardised.

AAI representatives could not be reached for comments. It was also not known what transpired in the meeting between AAI office-bearers and revenue secretary.

AAI representatives had met finance minister Arun Jaitley last month requesting to raise the basic customs duty on aluminium products to 10% from 5% now.

The government had recently imposed a 20% provisional safeguard duty on imports of certain catergory of steel.