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The Aluminium Association of India, the industry body of primary aluminium producers, has urged the government to increase the customs duty on primary aluminium from 7.5 per cent to 10 per cent and that on downstream products from 7.5-10 per cent to 10-12 per cent.
Similarly, it wants import duty on aluminium scrap to be increased from 2.5 per cent to 10 per cent.
Despite having significant primary aluminium capacity and potential to generate sufficient domestic scrap, India is completely dependent on imports of scrap.
Industry struggling to revive
The Indian aluminium industry is still struggling to revive from Covid pandemic impact for last two years.
The share of domestic producers market is declining with surging imports coupled with significant cost escalation for primary producers due to a rise in input costs of critical raw materials, escalating freights and logistics costs due to container shortage. The current coal crunch has further slowed down revival of the industry, said the association.
The basic custom duty on aluminium and aluminium scrap is not in line with other non-ferrous metals such as zinc, lead, nickel and tin, it said.
Share of scraps in imports up
The share of scrap in total imports increased from 52 per cent in FY-16 to 66 per cent in FY-21, resulting in forex outgo- of $2 billion (₹15,000 crore).
Incidentally, China imposed 25 per cent duty on aluminium scrap imports from US and classified aluminium scrap in restricted import list from July.
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Power market uncertainties result in the non-ferrous metal gaining 6% since Jan 1Post this the share of import from the US in China’s total aluminium scrap imports declined from 53 per cent in 2017 to just 16 per cent in 2019. India has overtaken China as world’s largest aluminium scrap importer due to Chinese measures. As a result, entire global scrap chain is shifting base to India in absence of any quality or BIS standards for scrap recycling/ usage and imports in the country.
The US is diverting large volume of scrap to India, since EU and other developed countries have stringent standards for scrap. The import from US as share of India’s total scrap imports increased from 8 per cent in FY16 to 24 per cent in FY21.
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