Aluminium Secondary Manufacturers Association (ASMA) had a meeting today, on 28 December, with Suresh Prabhu, the Minister of Commerce and Industry in wake of his media statement that the ministry is in favour of hiking import duty on aluminium. The association has submitted a petition making a case against hiking import duty on aluminium.
The association said that the duties will only favour the three major primary producers in India while disregarding the interest of the entire downstream sector. They insisted there has been no surge in the import of primary aluminium and hence, increasing duty on primary metal is irrelevant. The petition says that primary aluminium sector has already been given protection of 7.5% import duty and the primary metal is sold in the domestic market at a rate that is 14% higher from international prices. The primary industry, according to them enjoys benefits like cheaper energy and labour and abundant raw materials, making them the lowest cost aluminium producers globally.
The actual aluminium industry, according to the association consists of the 3500 small and medium manufacturers engaged in the manufacture of downstream products. The association believes surviving after purchasing raw material at 14% higher price from the primary producers and to compete with them in marketing of finished products is unfair for the entire industry. That will also make them non-competitive in the export market.
The association has also provided import data for primary aluminium to support their claim that the Indian primary producers are unaffected by the ongoing trade war between US and China.
The data does not indicate an alarming situation warranting an increase in import duty of aluminium ingots and scrap. They disagreed to the fact that an industry with capacity of 4.00 million tonnes and exporting approx. 2.00 million tonnes of aluminium per annum will be disturbed by a miniscule import of less than 1.00 lac tonnes a year.
They insisted that an increase the customs duty will hike the local prices and increase profits for the primary producers while adversely affect the downstream producers and affect the consumption of aluminium in the country. The increase in tariffs will not stop the import significantly but increase domestic price.
The trade war between US and China, according to the association has actually helped the primary producers as they have been exporting a huge quantity of aluminium billets, ingots. The trade war and sanctions of Rusal has opened many newer avenues to them to export metal in other countries where premiums are much higher than MJP. Primary producers have recorded a 21% increase in export in H1 (April- September’18) by exporting 7,72,000 tonnes of aluminium in this period as compared to 6,38,000 tonnes in the corresponding period last year.
On the contrary, the aluminium downstream manufacturers are the worst affected due to the ongoing trade war. With US markets curbed to Chinese manufactures, a huge quantity of aluminium rolled products, extrusions and aluminium foils are getting dumped in India with the help of 16% export incentive given by China on downstream products.
The association requested the customs duty on downstream products to be increased to 20% to counter the incentive for exports given by China so that local downstream manufacturers could survive. The association also urged the Ministry to reject the proposal of increasing import duty on aluminium and scrap and remove aluminium from FTA agreements as the same is being misused now by China and other nearby countries.
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