Indian Government mulling import duty rise for aluminium

The government is considering raising import duty on aluminium products by as much as five per cent, among other policy measures, to tackle unabated import of cheap products adversely impacting the sector.

"Domestic industry is going through tough a time. Some firms have approached the Directorate General of Safeguards for a hike in safeguard duty. "If it doesn't happen, we in our pre-budget consultation with finance ministry will propose," said Balvinder Kumar, mines secretary.

He said the government was aware of the situation the industry is going through and would take appropriate measures.

When asked on the duty hike, he said, "We will propose to raise it to 7.5 or 10 per cent from the present five per cent." Sources said mining conglomerate Vedanta has approached the Directorate General of Safeguards, while Hindalco, flagship firm of the Aditya Birla Group, is going to. Last month, industry officials met Hasmukh Adhia in this regard.

Domestic producers are facing the twin problems of cheaper imports and meltdown in global prices, on the lines of one on steel products to check cheap imports from China and West Asia.

In September, Aluminium Association of India members -Tom Albanese, chief executive officer, Vedanta, D Satish Pai, deputy managing director, Hindalco and Nalco CMD T K Chand - met Finance Minister Arun Jaitley and requested him to raise import duty on the metal.

Domestic producers are facing the twin problems of cheaper imports and meltdown in global prices. Primary aluminium prices at the London Metal Exchange have dropped 42 per cent to $1,540 a tonne in August from $2,623 per tonne in April 2011.

While, aluminium hot metal cost of production (excluding interest and depreciation) on the domestic front has risen 29 per cent to INR 1.2 lakh a tonne from INR 93,700 because of an increase in the cost of power, logistics and introduction of the renewable power obligation and a clean energy cess.