Indian Government Abandons Plan to Implement Tariff on Unwrought Aluminium

Indian Government Abandons Plan to Implement Tariff on Unwrought Aluminium

Due to protectionism criticisms for tariffs levied on imported steel, India has shelved a plan to impose a 5% provisional safeguard duty on unwrought aluminium. Such a tariff would affect imports from countries like United Arab Emirates, Malaysia, Russia, South Africa, Oman, Qatar, Bahrain, and Thailand.

The Directorate General of Safeguards recommended the tariff on April 21. But, upon review by the Board of Safeguards decided against the duty one week later.

“The Board of Safeguards has decided to defer the 5% provisional safeguard duty on unwrought aluminium. The Board has asked for more data related to surge in imports by various ministries and related stakeholders,” said a senior government official on condition of anonymity.

In the meantime, the Directorate General of Safeguards will monitor both the LME and domestic import price patterns. The Directorate may go back to the Board with a new recommendation after monitoring prices for a period.

“The matter of safeguard duty has also been raised by the end-user industry including electrical and semi-conductor makers, which said that the imposition of safeguard duty will make the products costlier for the industry,” said a second government official.

A Vedanta representative said the industry is going through a rough time due to several unrelated factors.

“As per our understanding, the Board of Safeguards has asked for more time and will meet again after a couple of weeks,” said a Vedanta representative to local media.

Although the industry favors a tariff, experts say such a tariff may not make much of a difference.

“The safeguard duty is likely to provide a modest protection to the domestic companies from cheap imports but unlikely to push up margins significantly,” said India Ratings and Research Pvt. Ltd analyst Mahavir Jain. He went on to say that Indian metal producers are not likely to experience any benefit due to the structural issues plaguing the domestic market, including overcapacity, import pressure, and weak demand.