India Finance Ministry mulling MIP imposition on aluminium to stem surging cheap imports

The Government of India is finally considering imposing a minimum import price (MIP) on aluminium to help address the issue of surging cheaper aluminium shipments from overseas markets, especially China and Middle East. The surge has been such that the even biggest names in the primary aluminium sector in India have been feeling the heat.

The Ministry of Finance led Revenue Department is known to be studying the case presented to them by domestic manufacturers led by Vedanta, Nalco, Hindalco and Balco under the umbrella concern of Aluminium Association of India.

The Chief executives of leading aluminium companies met Finance Minister Arun Jaitley on Thursday last week, with the demand to protect the domestic aluminium industry from cheaper imports. They sought imposition of import restrictions like MIP on aluminium import just the same way the GoI once imposed on steel, sources said.

Vedanta CEO Tom Albanese said discussions are on with states and the government to find a long-term solution so that domestic supply chain can be further developed and strengthened to facilitate growth of smoother functioning of domestic operations.

"Right now steel industry has a number of protections from imports but only about 15 per cent of steel comes from imports whereas 50 per cent of aluminium comes from imports in India. So, you have much greater import penetration in the aluminium sector than you have of the steel sector," he told PTI.

He pointed out to the fact China was sitting pretty with the world's 'biggest unutilised aluminium production capacity.' Considering the fact that China subsidises electricity, "if that Chinese capacity gets turned out with subsidised power, it is likely we will see flood of new imported aluminium coming into Indian market," he said.

India, he reminded, has the richest bauxite resources which should be made available to the domestic aluminium producers who are presently suffering from raw material crisis and have to resort to imports to sustain in a competitive scenario.

In their representation, the AAI told the revenue department that primary aluminium producers have incurred huge losses of INR 4,025 crore in 2015-16 fiscal, which was substantially higher than INR 1,480 crore loss in fiscal year 2014-15.

Albanese said, "In the long term it does not make economic or environmental sense for us to be producing aluminium in India with African bauxite. We should be producing aluminium in India with Indian bauxite".

The aluminium producers are working with the government to find a permanent solution "so that our supply chain for the aluminium business is actually a domestic supply chain," he said.

Government entity MECON Ltd has been roped in to conduct a study on the potential impact of MIP on aluminium. The firm is expected to come up with final recommendations by September-end, said industry sources.

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