India not to impose penal import duties on aluminium

India has terminated its investigation on imposition of safeguard or penal duties on imports of aluminium products.

The decision has been taken as pressure on the country not to impose the levy came from affected nations such as Russia, Malaysia and the UAE and the EU.

The decision is significant as the Directorate General of Safeguards had initially proposed a five per cent provisional safeguard duty on unwrought aluminium products for 200 days in April this year after investigating complaints from domestic producers such as Vedanta Ltd, Hindalco, and Balco, which demanded additional protection against imports.

The duty was, however, not imposed at that point of time following protests from exporting countries, and DG Safeguards continued with its final investigations.

“The Directorate General of Safeguards has terminated investigations for imposition of safeguard duty on unwrought aluminium products on the ground that alleged serious injury or threat of such injury to domestic industry during the period of investigation could not be established,” a government official told BusinessLine .

DG Safeguards, in its final report this month, observed that while imports of unwrought aluminium had increased in absolute terms as well as in relation to production during the period of investigation, it had not affected the performance of the domestic industry.

“The market share, production, domestic sales and productivity of the domestic industry had improved and capacity utilisation was almost at 100 per cent during the period of investigation…hence no protection is required under the safeguard law,” the report concluded.

The WTO allows imposition of safeguard duties on imports of items over and above the regular customs duty if there is a surge in its imports causing disruption for the domestic industry.

The EU, in a meeting of the WTO Committee on Safeguards in October, pointed out that in the case of unwrought aluminium products, India’s injury determination for the local industry was not conclusive and that the increase in imports was not sudden and sharp as required under the Safeguards Agreement.

While imports of the products have increased from 2,42,533 million tonne (mt) in 2011-12 to 4,32,370 mt in 2015-16 pushing up market share to 15 per cent, it has not resulted in a significant dent in the domestic industry’s market share which is close to 50 per cent.

The decision of the DG Safeguards, communicated to the WTO recently, comes at a time when there is increased scrutiny by countries on the way India imposes safeguard duties.

Last week Japan dragged India to the WTO against safeguard duties on certain hot-rolled steel products extended earlier this year.

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