Hit by cheap imports and falling prices of aluminium in the global market, domestic industry will be forced to take "drastic steps" like job cuts and production cap, Vedanta Aluminium said today.
The company, which is a part of billionaire Anil Agarwal-led Vedanta Resources, wants the government to hike duty charges on imports of aluminium.
"We are at such a low point that if the government does not support the aluminium industry, we may have to resort to drastic steps such as job cuts and bringing down production," Vedanta Aluminium CEO Abhijit Pati told PTI.
Vedanta Aluminium, which is one of India's largest aluminium producers, operates a refinery having a capacity of 1 million tonnes per annum (MTPA) at Lanjigarh in Odisha.
When asked about the timeframe for such drastic measures, he said: "The situation of industry is very bad, but it has so far not come to this level. If there are no concrete steps taken by the government to check cheap imports, then I fear such steps will have to be taken."
Surging imports from China and Middle-East has created a severe financial stress for the domestic aluminium producers.
"Domestic aluminium industry needs immediate support from the government to shield itself from imports from China and the Middle-East, which have crippled the sector," Pati rued.
Industry body Aluminium Association of India (AAI) met the Mines Secretary and other government officials last week and urged them to provide a level playing field for the Indian producers by raising the import duty on aluminium metals to 10 per cent, he added.
According to market analysts, the situation has worsened due to continuously sliding global prices in recent years.
In last three years, LME (London Metal Exchange) prices have come down by 35 per cent to USD 1,660 per tonne in June, 2015 from a peak of USD 2,555 a tonne in June 2011.
According to AAI data, total imports to India have grown by more than 159 per cent to 1,563 kilo tonnes (KT) in 2015 as against the import of 881 KT in 2011, mainly from China and Middle-Eastern countries.
This has led to imports accounting for 56 per cent of Indian aluminium consumption in 2014-15, while products of Indian producers account for only 44 per cent.
China, which possesses more than 50 per cent of world aluminium production, is now exporting over 20 per cent of its products and their exports to India have surged by 200 per cent in FY 2014-15 compared to FY 2010-11.
To capture global markets and gain competitive edge over its rivals, China offers indirect subsidy like power tariff discounts of around USD 200 per tonne to aluminium smelters, 13 per cent value added tax rebate on exports and favourable terms of credit to its companies.
Besides, China has reduced the freight rates equivalent to USD 35 per tonne of aluminium and has removed the import duty on alumina for its producers, AAI has said.
