India govt raises Customs duty on aluminium products from 7.5% to 10%

The Government of India yesterday proposed to raise the Basic Customs Duty (BCD) on aluminium products by 2.5 per cent, a move that will help curb influx of cheap aluminium imports.

Basic Customs Duty is being increased for aluminium products from 7.5 per cent to 10 per cent, Finance Minister Arun Jaitley said while delivering his Budget speech for 2016-17 in the Lok Sabha.

Last week, the Parliamentary Committee on Public Enterprises had recommended the government to raise import duty on aluminium and raised "serious concerns" on "adverse impact" of cheaper imports on the profitability of state-owned Nalco.

It said that out of total aluminium consumption in India, 55 per cent is met from aluminium scrap, on which the import duty is only 2.5 per cent, resulting in flooding of domestic market by cheap imports from countries like China.

These factors have led to Nalco and other domestic firms running up losses as well as losing the drive to increase their capacity utilisation since investments on the same are not likely to lead to profits, it added. As a result, companies like Nalco are going for cost-cutting measures as well as retrenchments and laying off workers to survive, it pointed out.

The panel took the line that apart from survival of the industry, this is an alarming scenario for factory workers and hence, urgent action from the government is warranted.