AAI, secondary aluminium producers lock horns over import duty hike

The AAI has claimed to be working in line with 'Make in India' initiative for removing dependency on imports

The Aluminium Association of India (AAI), the apex body representing the entire spectrum of the sector, has refuted charges levelled by secondary producers that it was pressuring the government for increasing import duty on aluminium and scrap by giving wrong figures of shipments.

The AAI -- which comprises primary producers, downstream manufacturers and R&D organisations -- has claimed to be working in line with 'Make in India' initiative for removing dependency on imports, saving $4.5 billion of forex outgo in FY2017-18 outgo.

The secondary producers under umbrella body Aluminium Secondary Manufacturers Association (ASMA) and partners Material Recycling Association of India (MRAI) and the All India Non Ferrous Metal Industries Association (AINEMIA) have accused the Aluminium Association of India (AAI) of building pressure on the government to raise duty on aluminium and scrap by giving wrong import figures at the behest of a few key players to promote their business interests.

 

Terming the allegations as 'malicious, malafide, misleading and short-sighted', the AAI in a letter to the Finance Minister Arun Jaitley said it "believes in true spirit of Make in India vision to entail competitiveness for entire aluminium sector including the downstream and primary producers, creating self-sufficiency in aluminium thereby removing dependency on imports and saving forex outgo from the country (to the tune of $4.5 billion (Rs 300 billion in FY18)".

It said the aluminium scrap import figures by it were based on official data and lashed out at secondary industry body ASMA which has alleged that the information given by the former was "incorrect and misleading".

Through a newspaper advertorial ASMA and its partner associations have alleged that AAI is being managed by two giant primary producers for their business interests without any representation from small and medium aluminium industries in India.

In the letter dated October 26 to the Finance Minister, the AAI said it has sought government's support in addressing the issue and ensuring that such attempts don't cause any damage for the domestic industry.

On the allegation of giving misleading details of imports post levies imposed by the US and pressuring the government to increase import duty on aluminium metal, the association said the figures were based on official data.

"The entire data provided is authenticated data referred from the Ministry of Commerce and Industry - Import Export Data Bank and from Directorate General of Commercial Intelligence and Statistics," the AAI said.

It said that India's aluminium scrap import jumped 21.44 per cent to 6,57,000 tonnes during the first half of the ongoing fiscal from 541,000 tonne during April-September period of financial year 2017-18.

The body has also urged the government to increase the duty on imports of aluminium scrap, saying the domestic players may become a victim of escalating trade war between the US and China.

Refuting the allegation that AAI is being managed by two giant primary producers it said it represented entire spectrum of Indian aluminium industry and has about 160 members with state-run NALCO CMD T K Chand as its president.

It also said that allegations that 4.1 MTPA production capacity of aluminium in India is higher than domestic demand and about 50 per cent of primary producers' output is being exported to different countries is wrong and added the country's capacity is sufficient to cater to domestic demand of 3.6 MTPA (million tonne per annum).

"... currently 60 per cent of India's aluminium demand is met by imports. In absence of any domestic market the primary producers are left with no other option but to export over 50 per cent of their domestic production," it said.

The aluminium prices are linked with London Metal Exchange (LME) prices, which is the global benchmark for all aluminium producers worldwide, the AAI said.

It added that the prices of Indian primary producers are also governed by LME prices in a transparent manner while responding to the allegation that primary players export metal at cheaper rate, but want higher price in the domestic market to increase their profits as they fix their prices considering the impact of import duty on metal.

It added that in last six months, the aluminium prices at LME prices have declined by 10 per cent and not increased as being said by the secondary aluminium associations.

Contrary to secondary producers stand that aluminium scrap is encouraged all over the world by levying minimum duties as this saves energy and the environment, the AAI maintained that the developed nations have stringent standards for recycling and usage of aluminium scrap.

A recent report 'Need for Aluminium Policy in India' by government think tank NITI Aayog highlights that "scrap usage in India is diffused and not regulated through standards or end-use restrictions with heavy reliance on importsDomestic scrap generation has to be our priority".

Aluminium scarp imports in India are totally non-essential in nature and should be restricted to encourage domestic industry and recycling of indigenous scrap, the AAI said.

Last week Vedanta Group Chairman Anil Agarwal urged the government to increase import duty on primary and scrap aluminium to 10 per cent, noting that India was becoming a dumping ground amid ongoing tariff war between the US and China.

Meanwhile, as per reports the government is considering a proposal to increase import duty on aluminium with a view to supporting domestic players.