Govt rules out minimum import price on aluminium

<p>India&rsquo;s ministry of commerce and Industry has ruled out imposing minimum import price (MIP) on aluminium and is of the view that the World Trade Organization&rsquo;s (WTO) non-compliant measure will tarnish the country&rsquo;s image globally.<br /><br />This comes in the backdrop of the National Democratic Alliance government courting criticism over its protectionist measures for the domestic steel industry. On 4 August, the government extended MIP on 66 types of steel products ranging from $341-752 per tonne for two months till 4 October.<br /><br />&ldquo;The ministry of mines had earlier this month sought an opinion from the commerce ministry regarding MIP on aluminium imports, but the latter has clearly said no to such a move as it is WTO non-compliant and its imposition will tarnish the country&rsquo;s image,&rdquo; said a senior government official requesting anonymity. <br /><br />The mines ministry had sought the commerce ministry&rsquo;s opinion given domestic aluminium manufacturers including Vedanta Ltd, Bharat Aluminium Co. Ltd and Hindalco Industries Ltd lobbying for introduction of MIP on aluminium.<br /><br />{googleAdsense} <br /><br />Earlier, these companies had also sought safeguard duty on aluminium imports but the plea was deferred, as reported by InfraCircle on 24 May.<br /><br />Safeguard duty, a WTO-complaint measure, is brought in for a certain time period by the government to help protect domestic industry from cheap imports. Importing countries also have other options, such as introducing anti-dumping duty, to make domestic prices at par.<br /><br />Newswire Press Trust of India on 14 September reported the Directorate General of Safeguards (DGS), a finance ministry arm, will hold a public hearing on 29 September to finally decide if safeguard duty on import of unwrought aluminium should be imposed. <br /><br />Unwrought aluminium is extracted from primary metal or scrap. India imports it from various countries such as the United Arab Emirates, Malaysia, Russia, South Africa, Oman, Qatar, Bahrain and Thailand. <br /><br />DGS had imposed 5% provisional safeguard duty on imports of unwrought aluminium on 21 April. However, the Board of Safeguards, chaired by the commerce secretary, in a 29 April meeting decided against it. <br /><br />&ldquo;The ministry of mines also concurs with the fact and favours completion of pending investigations of safeguard duty and anti-dumping investigations on unwrought aluminium,&rdquo; said the official quoted above.<br /><br />On 21 April, DGS in its preliminary investigation found that aluminium imports have caused financial losses to the domestic industry and had recommended a provisional safeguard duty of 5% on unwrought aluminium imports for a period of 200 days. However, the Board of Safeguards deferred it, as reported by InfraCircle on 3 May.<br /><br />&ldquo;No application has been moved by the companies related to MIP before the mines ministry,&rdquo; another government official, who also did not want to be named, said.<br /><br />The official added that the case may be taken, if received, after due consultations with the downstream industry comprising of manufacturers of utensils, wire and related businesses. <br /><br />The official further added that the aluminium downstream industry is meeting mines minister Piyush Goyal on Monday.<br /><br />Queries emailed to the spokespersons of the ministry of mines, commerce, Vedanta, Bharat Aluminium Co. and Hindalco Industries and National Aluminium on 16 September remained unanswered.<br /><br />Analysts, however, believe aluminium companies have seen a decline in margins during the first quarter this year compared with last year. &nbsp;<br /><br />&ldquo;It can be seen that companies&rsquo; profitability has declined. Also, there was an element of inventory losses in Ebitda (earnings before interest, tax, depreciation and amortization) of these companies,&rdquo; said Mahavir Jain, associate director at India Ratings and Research Pvt. Ltd.<br /><br />He added that physical premiums have also contracted to $200 from $400-500.<br /><br />For financial year 2015-16, Hindalco reported a profit of Rs.607 crore. While Vedanta clocked a profit of Rs.5,471 crore and National Aluminium Co. Ltd&rsquo;s profit was Rs.731 crore.</p>