India’s ministry of mines has reportedly recommended the ministry of finance to raise the import tariff on primary aluminium products, such as ingots and billets, from the existing 7.5 per cent to 10 per cent. The news came after industry sources said on Friday, December 10.
“Earlier this week, private players of the domestic aluminium industry have approached the finance ministry for an import duty hike via the ministry of mines,” sources close to the development told Business Standard.
As per the report, this recommendation has been made to discourage cheap imports of primary aluminium into the country and ramp-up the use of domestic metal.
The top three aluminium producers in India like Hindalco Industries, Anil-Agarwal-led Vedanta Limited and National Aluminium Company (NALCO) are expected to produce 4.2 million tonnes of primary aluminium together in the current financial year.
However, it has been pointed out that tariff hike, if imposed, might adversely impact the secondary aluminium industry as it relies on domestic producers to produce their material.
According to Anil Agarwal, also a patron at Aluminium Secondary Manufacturers Association (ASMA), India imports only 60,000-70,000 tonnes of primary aluminium, of which majority is advanced export entailment. So, he questions “Where is the question of injury to the domestic aluminium sector for which primary producers are asking for protection via duty hike?”
ASMA has about 3500 micro, small and medium enterprises (MSMEs) – that are secondary producers as members.
“We (secondary producers) are already buying primary aluminium at 14 per cent higher rates than the domestic primary market price to match the landed price of the material that is imported. Now, if duty is revised to 10 per cent, there will be an additional outgo for us,” said Agarwal.
“The increased outgo (if duty hike happens) for the secondary aluminium producers would be about Rs 4,000 crore. This is huge given the small players that this segment has.” added Agarwal.
In this respect, industry officials have pointed out that out of 4.2 million tonnes of primary aluminium usually produced, about 0.5 million tonnes are exported by NALCO and close to 2.1 million tonnes by the two other players.
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