The aluminium industry has shifted its stance from seeking hike in import duty to demanding safeguard duty, in line with the one imposed on steel shipments.

The three major aluminium producers Vedanta, Hindalco and Nalco under the aegis of Aluminium Association of India (AAI) will meet Revenue Secretary Hasmukh Adhia on Wednesday to build a case for safeguard duty. Earlier, the industry had sought the government to double import duty on aluminium products to 10 per cent in the wake of sharp rise in cheap imports from China.

Abhijit Pati, CEO, Vedanta Aluminium said with the domestic demand tapering in China they are now desperately looking for the export route and find India a convenient destination to off-load their surplus aluminium. “We have generated all relevant data and information for taking up our case for safeguard duty on both primary and rolled aluminium products,” he said.

A staggering 55 per cent of the domestic aluminium consumption is met through imports even as the domestic industry is reeling under a mammoth debt of ₹70,000 crore, as per AAI data.

Rising costs, competition

The Indian aluminium producers are currently facing the twin onslaught of cheap imports from China and a meltdown in global prices. Since April 2011, primary aluminium prices at London Metal Exchange have dropped 42 per cent from $2,623 (₹1,70,495) a tonne to $1,540 (₹1,00,100) a tonne in August this year.

The cost of aluminium hot metal production (excluding interest and depreciation) has increased 29 per cent to ₹120,000 a tonne from ₹93,700 a tonne due to rise in cost of power, logistics and introduction of Renewable Power Obligation and clean energy cess. The rise in production cost and fall in selling price has hit investment of ₹1.4 lakh crore made by domestic producers to double production capacity to 4 million tonnes per annum.

Idle assets

About 50 per cent of the industry’s installed capacity is lying idle, said AAI. Last month, major domestic aluminium producers met with the Mines Secretary Balvinder Kumar, Chairman of Central Board of Excise and Customs Najib Shah and Finance Minister Arun Jaitley to increase customs duty on all aluminium products to 10 per cent from 5 per cent. On September 14, the Centre imposed a safeguard duty of 20 per cent on Hot Rolled steel imports to product the domestic steel companies from cheap imports from China, Russia, Korea and Japan.

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