Though India’s primary aluminium producers continue to call for raising import duties on raw and scrap aluminium, downstream interests steadfastly oppose such a move, and have again gone on record to detail the harm they expect a rise in aluminium import duties would exact.
An open letter penned by President of Material Recycling Association of India (MRAI) Sanjay Mehta to Union Minister of Commerce and Industry Suresh Prabhu earlier this week spelled out the downstream industry’s concerns.
“Aluminium import is a necessity today. Certain critical auto components are manufactured through recycling of aluminium scrap which contains other required elements that come automatically with scrap. Primary aluminium cannot replace scrap in first place. Even if we try to replace scrap with primary aluminium, the cost of components will rise by up to 40 per cent which would increase overall production cost of auto sector.”
At present, imported aluminium scrap is assessed a tariff of 2.5 percent, while imported primary aluminium is subject to a 7.5-percent duty. Primary producers continue to agitate for a blanket 10-percent tariff, with support apparently building in the halls of India’s government for the proposition.
Though India has an aluminium scrap industry that collects around 1.2 million metric tons of material, the industry is composed of a legion of small firms and has yet to establish an organized system for efficiently moving scrap from collection points to processing plants. Per MRAI estimates, the implementation of a 10-percent tariff on scrap would put up to 3,500 SME’s out of business, leaving up to 2.5 million Indians without employ.
Metco Marketing director Dhawal Shah believes the import of scrap aluminium offers significant advantages to domestic collection efforts.
“As domestic supply chains are inadequate, the industry relies on imports of scraps. Besides being cost effective, these scraps use minimal resources and have significantly lesser carbon footprint. Most countries in the world are lowering their primary aluminum production to conserve the fast depleting natural resources – bauxite – for future use by encouraging recycling through zero import duty on scrap for recovering aluminium.”
Seeking to chart a middle path, an unnamed official from Aluminium Association of India (AAI) opined that a decision on scrap aluminium tariffs should be left to politicians.
“Increase in import duty would certainly hurt one section of aluminium industry in India. It is, therefore, important to leave the decision on import duty hike to the government.”