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Our Bureau

Availability of raw materials to downstream industries getting hit

Chennai , May 27

The Alloy Manufacturers Association has suggested to the Union Finance Ministry to do away with import duties on aluminium scrap to dampen the buoyancy in aluminium prices.

Through another representation to the Commerce Ministry, the association has sought changes in procedures relating to import of metallic waste and scrap such as registration of overseas suppliers and requirement of letters of credit that posed practical difficulties.

Difficulty in importing aluminium scrap affects availability of aluminium raw material to downstream industries, including the automobile and components industry, the association said.

In the representation to the Finance Minister, Mr P. Chidambaram, the association pointed out that there has been a steep increase in price of base metals since last October.

The increase in the price of industrial metals has affected the working of aluminium downstream industries.

Aluminium prices, which ruled at around Rs 93,600 a tonne in October 2005, increased to Rs 1,35,800 in May 2006.

The buoyancy in the commodity and metal exchanges has driven the prices up.

The association has suggested that the import duty on aluminium could be reduced to zero to curtail the price increase.

The Ministry had adopted a similar strategy for steel, it said.

In the other representation to the Commerce Ministry, the association said that the new trade policy imposes certain practical difficulties.

For instance, the policy says that overseas suppliers should be registered with the Director-General of Foreign Trade prior to May 31.

But this limits the sources of overseas suppliers. Instead overseas suppliers should be able to register prior to commencing supply.

Also, the new policy insists on transaction against letters of credit but the trade operates on cash against document terms. Letter of credit only adds to the costs for the importer.

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