The Ministry of Mines is expected to consider pushing for a hike in the customs duty on primary aluminium products to provide relief to an industry suffering from low prices and under utilised manufacturing capacity.

"We have asked the industry to make a representation to push their case before we take up the matter with the concerned departments of the government. The aluminium manufacturers are expected to meet me within a week," said Balvinder Kumar, Secretary, Ministry of Mines on the sidelines of the National Conclave on Mines & Minerals in Raipur, Chhattisgarh.

In Budget 2016-17, the government had raised customs duty on primary aluminium products to 7.5 per cent from 5 per cent earlier.

However, the industry-wide capacity utilisation remains low at around 50 per cent.

Prices on the London Metal Exchange, the global benchmark for aluminium prices, have remained low and volatile. On Tuesday, the LME price of aluminium was $1,652 per tonne which is lower than roughly $1,700 per tonne on the same date a year ago.

The stress is reflected in the profit and loss accounts of the aluminium manufacturers. Hindalco’s earnings before interest and tax from its aluminium business dropped 34.7 per cent to Rs 880.48 crore in 2015-16. Vedanta Ltd’s aluminium business had a negative earning before interest and tax of Rs 113.72 as compared to positive earnings before interest and tax of Rs 1,867.28. 

Despite the challenges, the industry was unsuccessful in proving a case for the levy of a safeguard duty.

Kumar also added that unlike the steel sector which got relief in the form of the minimum import price, similar measures are not on the anvil for the aluminium sector. 

"We are not considering any minimum import price or any other kind of duty relief as of now for the aluminium sector," Kumar added.

(The reporter was in Raipur on an invitation from Ministry of Mines)

Related Topics