Aluminium imports increase by 18-20% in the first quarter, prompting fears that the US-China trade war may lead to dumping.
New Delhi: The Narendra Modi government is looking to protect domestic aluminium producers through a series of measures amid fears that they could suffer collateral damage in the global trade wars.
The measures could include an increase in import duty on the metal as the country has witnessed an 18-20 per cent jump in imports of scraps and finished aluminium products in the first quarter of the current fiscal compared to the same period in 2017-18.
Aluminium imports rose to 5,49,000 tonnes in the April-June quarter this year compared to 4,65,000 tonnes in the year-ago period. A large chunk of the imports was from Malaysia and some Middle-East countries, which typically export to China.
Experts said that these countries have started “dumping” the metal in India due to the trade war between China and the US. While China has imposed a 25 per cent duty on aluminium scrap from the US, the US has imposed a 10 per cent tariff on the metal, effective from 23 March.
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This, policymakers said, has forced China to reduce its overall imports, due to which countries that perennially export to it are looking for newer markets.
Policymakers and industry watchers fear that with the US-China trade war intensifying there could be increased dumping of goods in India, especially of metals such as steel and aluminium, in the coming months if adequate measures are not taken immediately.
Unlike China and the US, the import duties for aluminium in India are 2.5 per cent for scrap and 7.5 per cent for primary aluminium metal.
“This (dumping) can lead to serious repercussions and the government is keeping a close watch on the situation. We are ready with our own plan and will act at the appropriate moment,” a senior government official told ThePrint.
Producers call for immediate action
The Aluminium Association of India (AAI), which represents domestic producers, has however sought immediate action. It has called for measures such as quantitative restrictions on imports and abolition of inverted duty structure on certain raw materials.
The industry has been demanding that the duties on both scrap and primary metal should be made uniform at 10 per cent. This, it says, will reduce copious imports of aluminium scrap, which can be converted into primary metal with only little value addition but one that poses significant health hazards.
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“We should not wait for things to get out of hand… The domestic industry is suffering and this issue needs to be resolved at the earliest,” said an industry analyst.
Experts said that despite producing excess capacity, India imports 54 per cent of its aluminium needs.
A large part of the problem is due to the various trade agreements India has signed with other countries, which is also pushing up imports and thereby trade deficit.