Indian Government Declines Imposing Safeguard Duty on Imported Aluminium

Indian Government Declines Imposing Safeguard Duty on Imported Aluminium

The Indian government has decided against imposing import safeguards against overseas aluminium. According to the announcement, made on Tuesday, the government did not find sufficient evidence that imported aluminium impacts the domestic aluminium industry’s bottom line.

The Directorate General of Safeguards, which is the branch of the finance ministry charged with making such determinations, said that the evidence before them showed that imports of aluminium have decreased, and the production and sale of unwrought aluminium (sourced both from scrap and from mining activity) has increased.

“There exists an injury to the DI (domestic industry) but there exists no serious injury or threat of serious injury to the domestic industry in the POI (period of investigation) and hence no protection under the safeguard law is required,” explained the Directorate in its notification.

The Directorate also cited the increase in the custom duty on aluminium this spring as sufficient relief, noting that the duty rose from five percent to seven-and-one-half percent.

The Aluminium Association of India has long been asking for a MIP of 15% of the LME’s price on aluminium imports, but as yet to no avail. The Association says that China’s dumping on India’s economy has incurred substantial losses over the past few years, and that the losses are becoming worse. According to the Association, losses were almost three times worse in the just-ended fiscal year than the year previous. It also says that a doubling of taxes on green coal that was instituted around the same time as the above-mentioned increase in custom duties on aluminium have all but wiped out any benefit the increase in aluminium duties may have had.

Domestic aluminium makers, including Vedanta Ltd, Bharat Aluminium Company Ltd (BALCO), and Hindalco Industries Ltd, began the push for relief earlier this year, prompting the government to take up the issue in April.

Late last month India’s state-run engineering consulting firm Metallurgical & Engineering Consultants (India) Limited (MECOM), who was commissioned by the Aluminium Association of India to study solutions for protecting the domestic aluminium industry, returned a recommendation last week that the government impose a MIP on aluminium entering the country. The domestic aluminium industry commissioned the study not long after the Commerce Ministry declined to impose a MIP, saying that such an action would run counter to the country’s trade laws.