Raising import duty on aluminium products 'tricky': India Mines Ministry

The government of India said the demand by primary producers to raise import duty is a "tricky" case as the move will help the bigger players -- Hindalco, Balco, Nalco and Vedanta -- but may hurt smaller firms that import scrap.

The Ministry is reviewing the case for increasing import duty on aluminium and has met with both the primary producers as well as the small companies who import aluminium scrap for various purposes.

"In this case there are two things. On one side there are firms who are importing scrap. On the other hand primary players are only four -- Hindalco, Vedanta, Balco and Nalco -- who tell us to raise the import duty on Aluminium. But if we increase it then the firms who import scrap will be adversely affected. They have also come to us and said that import duty should not be increased as it will adversely impact them," said Mines Secretary Balwinder Kumar. He added that the ministry is monitoring the situation and reviewing the demand of both the groups.

"It is a tricky situation. So there are conflicting interests. We had a meeting with the primary producers and asked them to provide us their results of the first quarter of this fiscal so that we can accordingly decide. So that we can see what view the ministry has to take. We are awaiting response from the primary metal manufacturers. So we have to see how we have to balance this," Kumar said.

Primary producers are urging the government to raise the basic customs duty on aluminium as they are being adversely affected due to cheap imports from China, Middle East.

As per the data from industry body Aluminium Association of India in last three years, LME (London Metal Exchange) prices have come down by 35 per cent to USD 1,660 per tonne in June, 2015 from a peak of USD 2,555 a tonne in June 2011.

Total imports to India have grown by more than 159 per cent to 1,563 kilo tonnes (KT) in 2015 as against import of 881 KT in 2011, mainly from China and Middle-Eastern nations. This has led to imports accounting for 56 per cent of Indian aluminium consumption in 2014-15, while products of Indian producers account for only 44 per cent. China, which possesses more than 50 per cent of world's aluminium production, is now exporting over 20 per cent of its products and their exports to India have surged by 200 per cent in 2014-15 fiscal compared to 2010-11.

To capture global markets and gain competitive edge over its rivals, China offers its companies indirect subsidies like power tariff discounts of around USD 200 a tonne to aluminium smelters, 13 per cent value added tax rebate on exports and favourable terms of credit.