Indian aluminium makers demand ban on bauxite exports

Battling a spate of cheaper aluminium imports from China and West Asia, aluminium producers have made a strong pitch to the Government of India to either ban bauxite exports or raise exports duty to 50 per cent.

The proposal to ban exports of bauxite, the key raw material in aluminium production, is one of the flagship demands of the domestic producers in the run up to the 2016-17 Budget.

Bauxite exports from the country are chiefly to China which adds value to the raw material and dumps them back in the form of aluminium and other finished products. Thus, China generates employment in their country and provides export rebate to value added products which are shipped back to India where aluminium manufacturers are forced to operate at depleted capacities.

In the last one year, bauxite exports to China have jumped 45 per cent. Indonesia has already banned bauxite exports while Malaysia has announced a three month ban on bauxite mining.

Besides this, to discourage imports, the aluminium industry has called for hike in basic customs duty on aluminium products by 10 per cent. Over the last six years, the share of imports to the country's domestic aluminium consumption has risen sharply from 40 per cent to 51 per cent. Consequently, the domestic producers have idled 51 per cent of their installed capacities.

The other demand of the aluminium makers is removal of inverted duty structure and slashing import duty of critical raw materials in aluminium value chain. As per the prevailing duty structure, 7.5 per cent duty is levied on aluminium fluoride and caustic soda whereas coal tar pitch and aluminium import duty are charged five per cent. Major aluminium producers like China, Brazil, European Union and USA don't have inverted duty structure for aluminium. Alumina, coal tar pitch and aluminium fluoride account for 44 per cent of production cost of aluminium and a cut in duty could help save cost by $38 million every year.