Mines ministry may move to hike aluminium import duty

Raipur, July 5: With the demand for imposition of safeguard duty not met, the aluminium sector is now urging the government to offset the impact of galloping imports by raising the import duty on the non-ferrous metal from 7.5% now to 10%.

The mines ministry might endorse the proposal and send it to the finance ministry, mines secretary Balvinder Kumar told reporters in Raipur. The aluminium sector is under severe stress with imports taking the highest share in the domestic market.

The customs duty on primary aluminium products were raised to 7.5% from 5% in the Budget for the current financial year. However, that did not help domestic firms such as Vedanta, Hindalco and others to raise their capacity utilisation, which now stands at just 50%.

The mines ministry had taken up their proposal of imposing safeguard duty with the finance ministry earlier, but on both occasions,thedirectorgeneralof safeguards turned down their plea.

Domestic firms also pitchedforputtinginplacea minimum import price (MIP) for aluminium, encouraged by the success of their counterparts in the steel sector, but the mines ministry did not pay much heed. The mines ministry, however, is not considering their plea to impose safeguard duty.

Indian companies are losing out to cheaper imports at predatory pricing. Importshaveeatenouttheir share in the domestic market. Out of India’s 2.8 million tonne (mt) annual consumption, the share of imports has gone up to 56% last financial year from 40% in FY11.

India’s installed production capacity of aluminium currently stands at 4.2 mt. However, production was just half of that in the last fiscal. China and West Asia contribute to around 1.56 mt to India’s annual consumption. Rising imports have threatened the industry’s cumulative investments worth R1.2 lakh crore.

A continuous fall in international prices in recent years has added salt to the wounds.