Import duty hike for Indian aluminium sector unlikely this year

The possibility of increase in import duty on aluminium by 2.5 per cent this year is "very bleak" despite the Mines Ministry pushing the case.

"Although Mines Ministry has written to Finance Ministry to raise import duty by 2.5 per cent, the chances of this happening in 2015 are very bleak," a source said.

Confirming the development, a senior government official said: "It seems the duty hike might happen in the first half of January or the government may put it in the budget, which will happen only in February 2016."

Earlier this month, Mines Secretary Balvinder Kumar told PTI that his Ministry has written to the Finance Ministry to hike the import duty on aluminium to 7.5 per cent from 5 per cent. The domestic aluminium industry says it is facing "a very tough time" on account of the twin problems of cheap imports from China and a meltdown in global prices.

The price of aluminium at the London Metal Exchange (LME) has fallen by 37 per cent to USD 1555 per tonne in November this year from USD 2477 a tonne in the year-ago period.

The development comes in the backdrop of the aluminium industry is lobbying with the government to hike import duty or impose safeguard duty on aluminium products.

In September, industry leaders recently met Finance Minister Arun Jaitley and requested him to raise import duty on the metal to check cheap imports from China, a scenario that can impact investments worth INR 1.2 lakh crore. The delegation from industry body Aluminium Association of India was led by Vedanta Group CEO Tom Albanese, Hindalco Deputy Managing Director D Satish Pai and Nalco CMD T K Chand.

Primary aluminium producers -- Vedanta, Hindalco and Nalco -- have invested around INR 1.2 lakh crore to increase the production capacity from 2.1 million tonnes per annum (MTPA) to 4.1 MTPA by 2018-19 fiscal.

According to industry data, total imports to India have grown by more than 159 per cent to 1,563 kilo tonnes (KT) in 2015 as against the import of 881 KT in 2011, mainly from China and Middle-Eastern countries.

This led to imports accounting for 56 per cent of Indian aluminium consumption in 2014-15, while products of Indian producers account for only 44 per cent.