‘Industry in dire need’: Aluminium association urges FinMin for implementation of remission of duties on export scheme

Prashasti Awasthi Mumbai | Updated on June 24, 2020

The Aluminium Association of India has appealed to the Finance Minister and Commerce & Industry Minister for implementation of Remission of Duties or Taxes on Export Products (RoDTEP) scheme.

According to the association, the implementation of RoDTEP has not moved much since its approval on March 13 this year. The industry is in dire need of some support to relieve it from the burden of high taxes and duties. This is giving rise to many a hindrance faced by the industries that produce aluminium.

The note mentioned that there is a huge burden of unrebated Central & State taxes and duties, constituting ~15 per cent of Aluminium production cost which is amongst the highest in the world. (5000 cr of taxes on Aluminium exports in FY19). Hence, The Indian Aluminium industry is struggling to retain global competitiveness.

While other countries support the Aluminium industry through various incentives/ subsidies, cheaper power with long term tie-ups, preferential gas allocation, tax benefits, export incentives, low-interest rate loans etc. for enhanced competitiveness.

Indian exports are also suffering due to the measures taken by the USA, imposing 10 per cent tariffs on Aluminium imports and granting exemption to Australia, Argentina, Canada and Mexico, which constitutes almost 50 per cent of US Aluminium imports.

As per the association, the USA’s withdrawal of GSP status (Generalized System of Preferences) for India has also hit the Indian Aluminium exports, which are now subjected to additional 2.6 per cent to 6 per cent MFN duties over and above the 10 per cent tariffs imposed under section 232. However, the same Aluminium product from Canada, Mexico, Argentina & Australia is imported in the US at zero duty, and Middle Eastern countries like Oman, Bahrain etc. enjoy MFN duty exemption due to existing FTA with the USA.

The association urged the Min of Commerce and Industry to take decisive steps for expediting formulation of RoDTEP Scheme on priority for priority sectors which have huge export potential, including Aluminium, Steel & Textile industry, among others. This would help boost exports with adequate remission of unrebated Central & State duties & taxes which constitutes around 15 per cent of Aluminium production cost.

It further stated in its note that Without losing time in paperwork, the Centre should consider enhancing MEIS benefit (Merchandise Exports from India Scheme) from current 2 per cent to 5 per cent for all Aluminium products under Chapter-76 till RoDTEP Scheme is implemented.

RoDTEP Scheme was announced on September 14 last year by the Finance Minister with an aim to boost exports and employment generation in various sectors in the country. It aimed to replace the existing Merchandise Exports from India Scheme (MEIS). Finance Minister kept the budget provision of Rs. 50,000 cr. for the initiative.

RoDTEP scheme is the World Trade Organization (WTO) compliant, will reimburse taxes/duties/levies at the central, state and local level, which are currently not being refunded

The sequence of introduction of the Scheme across sectors, prioritization of the sectors to be covered, degree of benefit to be given on various items within the rates set by the Committee will be decided and notified by the Department of Commerce.

Published on June 24, 2020

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