Budget 2018: With their market share shrinking from 60% in 2010-11 to 47% in 2016-17, domestic primary aluminium makers such as Hindalco, Nalco and Vedanta have urged the government to increase basic customs duty in the Budget on the metal and the metal scrap to 10% each from 7.5% and 2.5%, respectively now.
Budget 2018: With their market share shrinking from 60% in 2010-11 to 47% in 2016-17, domestic primary aluminium makers such as Hindalco, Nalco and Vedanta have urged the government to increase basic customs duty in the Budget on the metal and the metal scrap to 10% each from 7.5% and 2.5%, respectively now. In a memorandum to the mines ministry, Aluminium Association of India (AAI) said that, over the last seven years, imports of total aluminium have increased by around 100% to 1,751 thousand tonne in FY17 and that of aluminium scrap by 98% to 931 thousand tonne, resulting in their capacity utilisation down to less than 70%. “The rise in imports is threatening the survival of the domestic industry. Aluminium is the only metal which has differential duty between metal and scrap. Other non-ferrous metals like zinc, lead, nickel etc have same duty for both metal and scrap,” it said. Sources, however, said that an increase in import duty on aluminium scrap will inflate the cost of the final product for the consuming sectors, and might not be viewed by policymakers as serving the overall interest of the economy. Scrap imports constitute 53% of the total aluminium imports in the country. Till 2015-16, the import duty differential between primary aluminum and scrap was 2.5%.
Also Watch: FM Arun Jaitley May Tweak Income Tax Basic Exemption Limit
In the Budget 2017-18, the government increased the customs duty on primary aluminium by 2.5%, making a 5% gap in import duty between primary aluminium and aluminium scrap. “The hike in duty for aluminium metal, however, completely negated by the 100% increase in clean environment cess on coal from Rs 200 per tonne to Rs 400 per tonne,” it said in the memorandum. At present, the installed domestic aluminium capacity stands at 4.1 million tonne per annum while current annual domestic demand is around 3.3 MT. The primary producers claimed that they have invested Rs 1.2 lakh crore to increase the capacity over the years and demanded that the government should take steps to ensure that their Rs 70,000 crore dent does not turn into non-performing assets.
The producers also wanted the government to reduce import duty on critical raw materials such as alumina to nil from 5% now and coal tar pitch to 2.5% from 5% to 2.5% now. They also demanded that the basic customs duty on caustic soda lye, aluminium fluoride and anodes be reduced to 2.5% from 7.5% now. However, at the same time, they want the government to increase export duty on bauxite from 15% to 20% to encourage domestic value addition.