No ‘promises’ from Government of India on import duty hike on aluminium

The Government of India has yet again refrained from giving any assurance to the domestic aluminium industry on its demand for an import duty hike.

For the second time in a little over a month, on Thursday the top officials of aluminium majors BALCO, Hindalco, Vedanta Ltd and others, under the aegis of the Aluminium Association of India, met senior officials from the Mines Ministry, Department of Revenue, NITI Aayog and the Prime Minister’s Office to press their demand for an import duty hike.

The industry has been seeking an increase in import duty of aluminium metal to 10 per cent from the existing 5 per cent and aluminium scrap to 10 per cent from the existing 2.5 per cent.

However, no assurances were given on any timeline for the import duty hike, said a member of the Aluminium Association of India present at the meeting. He said while the body language of the Government representatives was positive, there is no indication of when the import duty on aluminium would be increased.

Industry officials say that while there hasn’t been a halt in hot metal production, capacity utilisation of domestic plants is now down to around 50 per cent. “With such low capacity utilisation and a continuing pressure on margins, expansion projects do not make sense right now,” the official said.

Estimates suggest that net realisation of domestic aluminium makers has fallen to around $1,700 a tonne at present, including the premium on London Metal Exchange prices. “This is a fall of about $500 a tonne from the $2,200 a tonne realisations in the fourth quarter of the previous fiscal,” the official said. Global prices have fallen mainly on account of oversupply in the international markets.