Aluminium firms raise duty anomaly

In a letter to the finance ministry, the Aluminium Association of India (AAI) has called for a reduction or complete removal of import duty on raw materials such as calcined pet coke, caustic soda lye and aluminium fluoride. It said the import duty on these raw materials, currently attract 7.5%, needs to be removed completely or cut to at least 2.5% to boost cost competitiveness.

In its representation to the finance ministry, the association also wanted a hike in import duty on sub standard aluminium scrap to 10% from the current 2.5% in order to curb dumping and strengthen domestic recycling.

“The domestic aluminium industry, as an anchor industry for several downstream industries, holds special potential. Aluminium demand in India is expected to double from today’s 4 MTPA to 10 MTPA by 2030. Domestic producers stand ready to cater to this rise with a planned outlay of over 4 lakh crores, creating 30 lakh additional jobs. Promoting domestic manufacturing will build India’s expertise in making world-class products. The upcoming Budget 2023 represents an opportunity to proactively address the aluminium industry’s concerns and accelerate our transformation into a truly Aatmanirbhar Bharat,” said Rahul Sharma, President, Aluminium Association of India.

AAI in its letter to finmin said excessive duties and inverted structure on critical raw materials deter investment and need to be rationalized so that domestic investment picks up and aluminium production is given a boost.

Inverted duty occurs when impotys og raw material attract higher duty than the finished product, which deters domestic manufacturing.

The industry had also urged for finalising quality standards for metal scrap imports to prevent sub standard and unused products from entering into the country and impacting the entire industry value chain.

“The burden of Central & State taxes & levies amount to 18 to 20% of Aluminium production cost giving domestic industry a significant disadvantage compared to its global peers. In addition, rising imports and high energy costs are also adversely impacting the industry. We, therefore, seek Government’s support to tide over this challenging phase and look forward to receiving supportive measures in the forthcoming Union Budget 2023-24,” the association wrote in its letter to the finance ministry.

In its other demand, the association has also sought rationalization of railway freight for the movement of critical raw materials like Bauxite, Alumina & Coal, along with priority in rail allocation to the Aluminium Industry, considering its must-run status.

It had also urged the Centre to consider eliminating GST Compensation Cess to support power-intensive industries such as Aluminium.

Aluminium is a sector of strategic importance for the country and an essential commodity for various other industries / SMEs due to its critical role in diversified applications crucial for economy like energy security, national defence, infrastructure, electrification, aerospace, automobile, consumer durables, packaging etc. The association has said that the Indian Aluminium industry is going through a challenging phase and is under immense threat by rising imports, declining domestic market share, increasing production and logistics costs. Moreover, the non-competitive energy costs and acute coal shortage for industry have adversely affected the sustainability of Indian Aluminium industry.