India's increasing downstream aluminium products imports affect domestic operation: Source says

According to a Business Standard report, the increasing dumping of aluminium downstream products in the Indian market from China has adversely affected the domestic operation of these items. Moreover, decreased global prices and low export incentives in the Merchandise Exports from India Scheme (MEIS) are eroding export margins of the domestic downstream producers and therefore, threatening their survival.

Unlike big primary producers, secondary players face the price disadvantage as they have to buy aluminium from primary makers at a premium of 14 per cent over London Metal Exchange prices and then compete with them in downstream product sales.

Aluminium Secondary Manufacturers Association (ASMA) patron Anil Agarwal said in an email: “Chinese manufacturers, with the help of an export incentive of 16 per cent, are dumping downstream products in India at throwaway prices, particularly after the US blockage. Our local downstream manufacturers, who are mainly in micro, small & medium enterprises (MSME) sector can’t protect themselves from this onslaught of Chinese dumping and may not survive long if it continues. They can’t increase their export markets with the help of a meagre 2-3 per cent MEIS benefits only when their market is being taken away by foreign goods.”

India’s lenient tax structure on downstream imports has turned the land into a favoured hunting ground. India’s import duty on downstream aluminium products is 7.5 per cent, against 20-30 per cent in Southeast Asian nations having free trade agreements (FTAs) with India. That apart, China, in a bid to incentivise its secondary manufacturers, provides an export incentive of 16 per cent.

ASMA feels India’s downstream aluminium products import has increased alarmingly in the form of aluminium sheets, foils, wire rods, and extrusions, attributing to the US-China trade war.

Agarwal noted, “The domestic downstream product manufacturers like us are getting threatened, not the primary producers.”

This is the reason why ASMA feels the Indian Government should levy additional tariffs on aluminium downstream products import or should introduce an anti-dumping duty on Chinese products. ASMA feels that the government must also ensure the products of Chinese origin are not re-exported via Southeast Asian countries enjoying FTAs with India.