AAI wants the government to reduce customs duty on raw materials

To scale up production capacities and adequately meet the increase in demand, the Aluminium Association of India (AAI) said on Tuesday that an investment of roughly INR 4 lakh crore would be needed. By 2030, India's demand for aluminium will increase exponentially from the current 4 million tonnes per annum (MTPA) to 10 MTPA.

Representatives of the aluminium sector have requested government assistance to support this difficult time as they face difficulties from increased foreign imports, a shrinking market share, and rising prices. The high cost of obtaining raw materials is a significant barrier to luring new investments, according to the companies that make aluminium.

"This is stifling the development of the aluminium sector, including the domestic scrap landscape," said AAI.

According to the trade group, several crucial inputs for the industry, including aluminium fluoride, calcined pet coke and caustic soda lye, have high tariffs of 7.5 per cent that should be eliminated or rationalised to at least 2.5 per cent to increase cost competitiveness. The AAI has also noted that now, just government taxes account for close to 20 per cent of the cost of producing aluminium, citing the higher cost of production owing to the rising cost of raw materials.

Additionally, preventing the importation of low-quality foreign waste into India is essential for the overall growth of the native recycling industry. There are now concerns about safety and the environment associated with imported scrap that is not subject to quality requirements.

Representatives from the sector have suggested that to prevent India from becoming a recipient of subpar foreign scrap, the appropriate quality requirements should be put in place coupled with a tariff of at least 10 per cent rather than the current 2.5 per cent. In addition to giving the aluminium sector priority in rail allocation, given that it is a must-run business, AAI advised rationalising railway freight for the transportation of vital raw materials, including bauxite, alumina, and coal.

To boost power-intensive businesses like aluminium, the industry organisation also requested that the government take the repeal of the goods and services tax (GST) compensating cess into consideration. It also asked the government to prevent unrestricted imports of low-quality scrap from flooding the local market.

According to AAI, the fortunes of numerous crucial sectors vital to India's development rest with aluminium. The local aluminium industry association said the Union Budget 2023 is significant because it allows the government to create an environment that would support the industry's sustained growth.

The Aluminium Association of India remarked, "Despite the lengthy geopolitical battle this year upending aspirations for long-term peace, Indian industry has been regarded as a barometer for its economy, showing hope for ongoing growth amid the instability."