Plight Of India’s Downstream Aluminium Sector Overshadowed By “Selfish” Primary Producers: ASMA’s Agarwal
08 December 2018 by Staff
Responding to a news brief published by Aluminium Insider last month, Aluminium Secondary Manufacturers Association (ASMA) patron Anil Agarwal emailed a three-page response to the site’s editor-in-chief challenging primary aluminium producers’ contentions that a flood of low-cost aluminium from the People’s Republic of China is inflicting harm upon the country’s primary aluminium producers.
Agarwal charged primary producers with exaggerating the magnitude of the problem of overseas imports, noting the several times they have approached the federal government for relief and been dismissed.
The aluminium primary producers, especially the two companies belonging to large private groups are in the habit of regularly approaching the Government for increase in tariff for their selfish intention to earn higher profits giving lame excuses. You would recall that primary producers filed applications for imposition of Safeguard duty in 2016. However, DG safeguard found after thorough investigation of their records that the data of production, employment, imports were all wrong. Obviously, the application was rejected. Thereafter, they tried for MIP, anti dumping, increase in customs tariff but all of them were rejected being false and without any merit.
Agarwal continues by taking issue with the experts’ contention that rising levels of imported aluminium ingot and wire rod are a cause for concern, opining that the import of 17,142 metric tons of ingots and wire rod are not concerning for an aluminium sector with 4 million metric tons per annum of aluminium capacity, half of which is exported.
He then took issue with concerns expressed by some over the import of fake semis.
Also, of late the primary producers are making a noise about rising import of ‘fake semis’ which is nothing but a term invented by them just to gain sympathy as no such item exists in HS codes for international trade. Point is when there is hardly any then imports what are they complaining about?
Per Agarwal, a rise in import duties will not stem the flow of such imports, as domestic producers will raise prices as well. In fact, he argues, the entire point of such duties is to provide cover for domestic producers to increase their own prices, harming downstream stakeholders and ultimately consumers.
He then challenged the notion that an increase in scrap aluminium is undesirable. Opining that an increase of 29 percent over a three-year period that saw consumption rise by 27 percent is not cause for alarm, Agarwal noted that the imported scrap is typically used in automotive and deox applications, as primary aluminium is cost prohibitive.
Agarwal went on to say that the ever-worsening trade war between the United States and the People’s Republic of China is a “blessing in disguise” for primary producers. India’s primary producers together have witnessed a 21-percent increase in exports in the April through September period, he notes, jumping from 638 thousand metric tons last year to 772 thousand metric tons this year.
The biggest casualty from the U.S.-China trade war is the downstream sector, he says. As American markets are now closed to Chinese downstream firms, India has witnessed a severe rise in such imports, spurred on in no small part to a 3-percent rise in export incentives offered by Beijing, totaling 16 percent as of early this year.
Agarwal closed by reasserting his concern for India’s downstream sector, which is echoed by ASMA. Opining that a healthy downstream sector is vital for the continued health of primary aluminium producers, he requested that facts and figures outlining the ongoing struggles of downstream stakeholders be given consideration similar to that afforded primary aluminium manufacturers.
Correction: A previous edition of this story identified Anil Agarwal of ASMA as the chairman of Vedanta. Though the chairman of Vedanta is named Anil Agarwal, he is not the same person as the patron of ASMA.