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Jindal Aluminium, one of the largest downstream product producers, has urged the government to remove import duty on primary aluminium to encourage domestic value addition and help the survival of downstream MSME producers, particularly when the demand is reviving after Covid pandemic impact.
Primary aluminium producers sell their products in India at import parity price including the import duty. Primary aluminium in India is sold at LME price with an additional charge of 8.25 per cent import duty and premium of 4-5 per cent towards clearing and forwarding charges.
The demand for aluminium in India is suppressed and adversely affected due an additional cost of about 13 per cent and a huge quantity of downstream products dumped by China.
Pragun Jindal Khaitan, Managing Director and Vice-Chairman, Jindal Aluminium, said the government should withdraw the undue protection for primary aluminium producers and help the Indian aluminium downstream industry thrive.
Pricing disparity
The pricing disparity puts acute cost pressure on MSMEs and make the uncompetitive in global markets, he said.
“Since primary aluminium is made in India, why should the Indian downstream producers pay a global premium. This is an unnecessary price protection for the aluminium made in our own country,” he said.
FTA benefits
About 50 per cent of valuable primary aluminium produced using the country’s mining wealth is exported from the country while the secondary products such as extrusions, sheets and foils are dumped by neighbouring countries taking advantage of free trade agreement and incentives given in the exporting countries, said Khaitan.
The unorganised downstream industry faces stiff competition due to the low margin, mushrooming of extrusion manufacturing units due to low entry barriers and dumping of aluminium downstream products from nearby countries such as China.
The customs duty should be lower at the raw material stage and increase along the value chain. This structure increases value addition within the country by consuming domestic raw material, boosts industrialisation and increases employment.
“This will also support and make government’s Make in India and Atmanirbhar Bharat a reality. But what is happening in the aluminium industry is just the reverse,” he said.
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