Indian primary aluminium makers get Mecon to prepare a report on MIP for them

India's primary aluminium producers have hired state-run engineering consultant Mecon Ltd to prepare a report exploring the possibility of introducing minimum import price (MIP) on aluminium products and approach the government with the same.

The move was directed shortly after the ministry of commerce and industry ruled out the proposition to impose MIP on aluminium citing the cause that the World Trade Organization’s (WTO) non-compliant measure will mar the country’s image globally. India's ministry of mines too favoured the move and insisted that the pending investigations of safeguard duty and anti-dumping investigations on unwrought aluminium is completed first.

Mecon, hired by Aluminium Association of India, Vedanta Ltd, Hindalco Industries Ltd and National Aluminium Co. Ltd (Nalco), will submit its report to the ministry of mines.

“The consultancy firm had taken cost data from primary manufacturers and analysed it. Now, downstream industry has recently submitted data to them. After going through all this, Mecon will shortly bring out the report,” said a senior government official.

The Indian aluminium manufacturers have been lobbying for safeguard duty on aluminium imports but the plea earlier was deferred. In April, the ministry of finance controlled Directorate General of Safeguards, found in its preliminary investigation that aluminium imports have caused substantial financial losses to the domestic industry and so recommended a provisional safeguard duty of 5 per cent on unwrought aluminium imports for a period of 200 days. [Safeguard duty, a WTO-complaint measure, is imposed for a short stipulated period of time by the government to help protect domestic industry from cheap imports]. However, the Board of Safeguards had deferred it.

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Industry experts believe Indian aluminium makers should explore overseas markets to spread risk. The domestic aluminium production capacity is already way higher than the domestic demand; the trend is expected to continue over the medium term. "The total primary aluminium capacity in India will increase by almost 30 per cent following the completion of the ongoing projects of Vedanta. In such a situation, with aluminium imports meeting over a third of domestic demand, Indian manufacturers will have to depend on exports to maintain an acceptable level of capacity utilisation rate for the industry,” said Jayanta Roy, senior vice-president at Icra Ltd, a rating agency.