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New Delhi, October 6:: The small scale units (SSUs) using aluminium as raw material, in a memorandum to the Government, have demanded that duty on aluminium should be brought down to near zero level post-divestment of National Aluminium Company (Nalco).
“In the absence of the competition policy, there is no effective mechanism available in the country to thwart monopoly formation after the divestment of Nalco, the second largest producer of aluminium in Asia and the fifth in the world as irrationally higher import-duty on the commodity provides the perfect setting for monopolistic strategy for domestic producers,” the Federation of Indian Micro, Small and Medium Enterprises (FISME) president Dinesh Singhal said. He said anti-competitive behaviour can not be checked by just restricting present players from controlling a public sector undertaking. The situation should be corrected by tariff adjustment wherein the fear of monopoly will vanish for ever.
According to FISME, the viability of over two lakh SSIs is based on aluminium which have concentration in sectors such as automobiles, building, construction, electricals and electronics, packaging and house hold industries. After the removal of Quantitative Restrictions (QRs) and liberalisation of import regime, the sector needs to be globally competitive to survive and grow. The availability of competitively prices aluminium is also essential for creation of low cost infrastructure such as power and transport for which aluminium is a critical input. Aluminium is one of the basic building blocks of a modern industrial economy. With large reserves of bauxite, coal and mature aluminium producing industry, Indian companies are one of the lowest cost producers in the world.
India has the potential to become a major players in the metal. For this to happen, a global competitive environment is a pre-requisite which will bring in its wake quantum improvement in technology, marketing and productivity.
When approached for comments, the noted economist Bibek Debroy said, “The drastic change in duty will not harm as the Indian primary producers have a an inherent strength to face global majors as is evident by large export volumes of aluminium.
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