MSMEs, SMEs to be hurt from government’s import duty hike plan, says MRAI

Sanjay Mehta, President of Material Recycling. Association of India (MRAI) has opposed the proposed increase in import duty on primary aluminium and aluminium scrap from 7.5 per cent and 2.5 per cent to 10 per cent.

In a letter addressed to the Union Minister of Commerce and Industry Suresh Prabhu, Sanjay Mehta said, “Aluminium import is a necessity today. Certain critical auto components are manufactured through recycling of aluminium scrap which contains other required elements that come automatically with scrap. Primary aluminium cannot replace scrap in first place. Even if we try to replace scrap with primary aluminium, the cost of components will rise by upto 40 per cent which would increase overall production cost of auto sector.”

Kishore Rajpurohit, Director of MRAI, believes that the move would result in shutting down of 3500 medium, small and medium enterprise (MSME) units. Small and medium enterprises (SMEs) would also be shut down which would render nearly 2.5 million jobless.

Commerce and Industry Minister Suresh Prabhu said this week that the commerce ministry is in favour of increasing import duties on aluminium to support domestic producers. “The proposal is under examination and we support the proposal, Prabhu said.”

 “As domestic supply chains are inadequate, the industry relies on imports of scraps. Besides being cost effective, these scraps use minimal resources and have significantly lesser carbon footprint. Most countries in the world are lowering their primary aluminium production to conserve the fast depleting natural resources – bauxite – for future use by encouraging recycling through zero import duty on scrap for recovering aluminium,” said Dhawal Shah, Director, Metco Marketing.

A senior official of the Aluminium Association of India (AAI), said, “Increase in import duty would certainly hurt one section of aluminium industry in India. It is, therefore, important to leave the decision on import duty hike to the government.”