Aluminium Association of India seeks 10% import duty on aluminium scrap

New Delhi: AAI, the apex body representing aluminium producers, has sought an increase in basic customs duty on aluminium scrap to 10 per cent as India has emerged as the world's largest dumping ground for such scrap, resulting in a forex outgo of USD 3.7 billion in FY23.

The current customs duty on aluminium scrap is 2.5 per cent.

In FY23, overall aluminium imports went up by 24 per cent from the previous financial year, resulting in a forex outgo of USD 7 billion or about Rs 56,291 crore.

Within imports, India has become a prime target for the dumping of low-quality foreign scrap.

"Given that foreign scrap is not governed by quality standards, it presents significant safety and environmental risks. In response, AAI has sought a duty of 10 per cent on scrap imports, as a strong deterrent against dumping," the Aluminium Association of India (AAI) said in its representation to the government.

Besides, AAI has sought an increase in duties on imports of primary aluminium to 10-15 per cent to create a fairer playing field.

It further said the Remission of Duties or Taxes on Export Product (RoDTEP) scheme, developed to encourage high quality exports from India, could be a game changer in stimulating domestic aluminium production.

Over 30 per cent of all aluminium exports is from Special Economic Zones and Export Oriented Units, but the rates for these units under RoDTEP are yet to be notified.

AAI has now sought their urgent notification in order to boost the scheme's viability.

While several advanced economies actively support their domestic aluminium sectors, this is not so in India. Conversely, the sector is dealing with challenges such as high duty structure on key inputs such as calcined pet coke, caustic soda lye and calcined alumina.

AAI also sought a downward revision in custom duties to 2.5 per cent on crucial materials in order to boost the industry's cost competitiveness.

The sector has sought rationalisation of high government levies on coal, which are driving up production costs. Despite a natural competitive advantage in coal, challenges on account of availability, high taxes, and compensation cess among others are making the power costs of smelters unviable.

This places an added cost burden on power-intensive industries such as the aluminium sector.