The industry has asked for a duty reduction on scrap to 10 per cent from 21.15 per cent currently. Incidentally, the finance ministry had brought down the import duty on scrap from 31.7 per cent to 21.15 per cent in the last budget. However, the effective reduction stood at only 3.8 per cent, compared to 25 per cent which prevailed in the fiscal 1997-98.

A case for lowering of the duty has been put forward by a working group on non-ferrous metals headed by the ministry of mines, said a top industry official. According to an industry analyst, the reduction of the import duty on scrap will in no way affect the fortunes of upstream players as the final metal is quite different. It may be noted that graded aluminium scrap is brought at a price of $1,210-1,230 ametric tonne and is slightly lower than the aluminium ingots which are quoted at around $1,300 a metric tonne.

Moreover, aluminium scrap constitutes just about three per cent of the total aluminium imports at about 1,400 tonne per month and hence a fear among local ingot aluminium manufacturers that huge investments towards alumina smelting capacities are jeopardised, is incorrect.

Moreover, the analyst opined that import of graded scrap would help increase efficiencies in metal requirement and subsequently increase consumption.

Modern scrap recycling is environmentally benign and requires approximately an investment of $500 per tonne installed compared to $5,000 per tonne installed for primary metal.

The downstream players have also suggested the introduction of a minimum scrap price is required, in case of any unchecked flow of cheap scrap into India. This is essential in the wake of a threat, if any, by the primary producers.

According to a market observer, scrap is imported in a crumpled,baled and briketted form and there was no chance of it being sheared into small pieces and underinvoiced to take advantage of the 20 per cent duty on cess on scrap at any cost.

It is estimated that the aluminium industry can make a potential saving of almost Rs 250 crore on a reduced import duty on scrap aluminium for recycling purposes from an average 25 kilo tonne per annum unit and this when factored in on the present devaluation, savings on import cost is estimated to be higher.