India govt initiates safeguard investigation against aluminium imports

The Directorate General of Safeguards (DGS) has initiated the investigation in alleged increased imports of unwrought aluminium for causing injury to the domestic aluminium industry.

The period of investigation is 2011-12 onwards till 2015-16. This investigation came on the application filed by aluminium makers asking the government to “immediately impose a safeguard duty on the imports of unwrought aluminium for a period of four years.”

The application was filed by Vedanta Limited, Bharat Aluminium Company (Balco) and Hindalco who have sought safeguard duty imposition on alloyed as well as non-alloyed wrought aluminium products.

The domestic Aluminium industry has asked for increase to 10 per cent from current 7.5 per cent. It was 5 per cent earlier, when it was revised in this year’s Union Budget.

The import of aluminium has increased by 78 per cent during 2011-12 to 2015-16 (annualised) touching 4.32 lakh tonne. On the other hand, the domestic production has increased by 43 per cent during the same period to reach 15 lakh tonne.

The applicants said: “The profitability of the domestic industry has deteriorated in the recent year (2015-16) and the domestic industry is now suffering financial losses.” The application reviewed by Business Standard also said the market share of the imports has increased to 15 per cent from 11 per cent in past four years.

DGS in its notice for investigation said: “After examining the application on different economic parameters, it is seen that prima facie, despite improvement in productivity, increased imports of PUC (alloyed and not alloyed unwrought Aluminium) in absolute term have caused losses to the domestic industry and are threatening to cause serious injury to the domestic producers of the PUC and as such it has been decided to initiate an investigation in the matter through this notice.”

At the same time, the Indian Electrical and Electronics Manufacturers Association (IEEMA) had contested the any increase in the import duty as it would hurt their cost margins.

In its letter to the Secretary, ministry of mines has said as Aluminium is widely used as raw material in manufacture of cable, conductor, transformers etc used in power sector. “Any increase in customs duty on Aluminium metal will result in corresponding increase in cost of value added goods/finished goods. It will not only harm downstream industries but also result in higher cost for consumers, ultimately common man,” said the letter reviewed by Business Standard.

This, IEEMA said would hurt the government programmes such as 24X7 Power for All and rural electrification etc. It was asked for roll back of import duty to 5 per cent from current 7.5 per cent.

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