Indian aluminium companies seek exemption from Donald Trump's 10% levy

Indian aluminium producers have sought exemption from the 10 per cent tariff on aluminium imports announced by the Trump administration. Similar exemption has been granted by the US government to Canada, Mexico and Australia.

US government has exempted Canada and Mexico from the tariffs given the ongoing renegotiation of North American Free Trade Agreement (NAFTA). The exemption has been extended to Australia due to the bilateral strategic tie-ups between the two countries.

The US government has announced it will assess individual exemptions. US President Donald Trump said, “America will remain open to modifying or removing the tariffs for individual nation as long as we can agree on a way to ensure that their products no longer threaten our security.”

The domestic aluminium companies feel given the strategic tie-up between India and US, the Indian government should flag the issue with its counterpart in US and ask for individual exemption of India from the tariffs.

The Aluminium Association of India (AAI) has written to the Union ministry of commerce & industry in this respect.

“The global leaders of European Union countries and other close allies of US like UK, Japan and Korea are taking up this matter with the US government, seeking individual exemptions. In line with other nations, this individual exemption from the US tariffs shall also be sought for India to support the Indian aluminium industry since the tariffs shall render India exports to US uncompetitive vis-a-vis other nations”, the AAI stated in the letter to the Ministry of Commerce & Industry.

AAI has argued that aluminium imports into US from India by no means pose any threat for their national security, domestic industry and jobs. Instead, aluminium sourced from India caters to the increasing US demand for high quality aluminium for their infrastructure, defence, automobiles and aviation sectors.

“Our exports to US are miniscule- it's only 125,000 tonnes each year and 60 per cent of it are aluminium ingots. Countries like China and Middle East are exporting heavily to the US. The import tariffs by US will have a sobering impact on the Indian commodity markets”, said TK Chand, president, AAI and chairman and managing director at National Aluminium Company (Nalco).

In 2017, US had an aluminium making capacity of 1.8 million tonnes against which it produced 0.78 million tonnes. But, its total aluminium consumption was significantly higher at 5.51 million tonnes of which 5.04 million tonnes were fed by imports.

Canada, Russia, UAE and China together comprise 73 per cent of the total aluminium imports into US. India’s share in the US aluminium import basket was a meagre two per cent. During April-December of this fiscal, India has exported barely 0.1 million tonnes but the country aspires to take its share of exports to US to five per cent in the coming years with a focus on high quality exports through long-term strategic tie-ups.

Indian aluminium exports to the US are valued at $350 million. This means the Indian producers have only 0.8 per cent share to the overall aluminium exports to the S of the order of $42.2 billion.