Aluminium industry wants import duty on scrap to be hiked to 10%

The aluminium industry has urged the Centre to increase import duty on aluminium scrap to 10 per cent from 2.5 per cent. In its pre-Budget memorandum to the Government, the Aluminium Association of India has also demanded rise in primary aluminium import duty from 7.5 per cent to 10 per cent.

The current customs duty difference of five per cent between the primary aluminium and scrap has led to 56 per cent rise in scrap imports, threatening the survival of aluminium producers in India, the association said.

Aluminium scrap imports have risen seven per cent to 9.31 lakh tonnes last fiscal. In the first half of this fiscal it has already touched 5.41 lakh tonnes and on an annualised basis it is expected to hit 10.82 lakh tonnes in FY18.

The import of scrap was under control till the duty difference between scrap and primary aluminium was at 2.5 per cent, but in the last Budget the Government increased the import duty on primary aluminium to 7.5 per cent to protect the domestic industry. This widened the gap between scrap and primary aluminium metal to five per cent and pushed up scrap imports, said the association.

In fact, overall aluminium import (including primary metal and downstream products) of 17.51 lakh tonnes, accounted for 53 per cent of the total domestic demand of 33 lakh tonnes. This has severely impacted the domestic industry which has build up aluminium production capacity of 41 lakh tonnes.

The domestic aluminium producer’s market share is down from 60 per cent to 47 per cent and dragged down capacity utilisation of primary producers to less than 70 per cent, it said.

The association has also called for reduction in import duty on key raw materials such alumina from five per cent to nil, coal tar pitch from 5 per cent to 2.5 per cent, caustic soda lye from 7.5 per cent to 2.5 per cent, aluminium fluoride from 7.5 per cent to 2.5 per cent and anodes from 7.5 per cent to 2.5 per cent.

The increase in LME (London Metal Exchange) aluminium prices by $251 a tonne to $2101 a tonne ($1850 a tonne) in last three quarters was negated by the $730 a tonne rise in production cost of the domestic industry due to levy of various cess and duty on raw material .

The association has also sought an increase in export duty on bauxite from 15 per cent to 20 per cent to encourage domestic value addition and exempt the industry from ₹400 a tonne GST compensation cess on coal to support power intensive industries.