Domestic primary aluminium producers pitch hard to counter cheap imports

In a bid to bring down the country’s aluminium imports, domestic primary aluminium producers such as Hindalco Industries and Anil Agarwal-led Vedanta Ltd are working with the government at three levels—primary aluminium, scrap and downstream products.

The domestic primary aluminium producers have been seeking trade remedial measures, such as anti-dumping duty and anti-subsidy duty, but they are also working of new products.

“We are involved in quite a few import substitution projects and are working closely with the government currently to put more defence alloys and aluminium material,” Satish Pai, managing director at Hindalco Industries said at the company earnings concall. Currently, cheap aluminium imports constitute 60 per cent of the country’s total lightweight metal consumption.

The domestic aluminium industry is capable of substituting 100 per cent primary products and about 50 per cent of downstream products that are imported into India with its existing capacities, said industry officials.

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Vedanta Ltd together with Bharat Aluminium Company Ltd has a total integrated aluminium capacity of 2.3 million tonne, while Aditya Birla Group company, Hindalco Industries has an aluminium smelting capacity of 1.3 million tonne.

“Vedanta Aluminium has put up a facility to make alloy wheels, becoming the first player in India to commercially produce primary foundry alloys for Indian automobile industry,” said Sunil Duggal, chief executive officer at Vedanta Ltd.

India has been one of the largest importers of primary foundry alloys until two years ago.

Alongside, to counter the heavy aluminium scrap imports, domestic producers have been asking the government and Bureau of Industry Standard (BIS) to develop quality standards for aluminium scrap imports in accordance with international aluminium scrap standards of European Union and China.

The industry also wants a non-ferrous metal recycling policy and incentives for recycling of domestic aluminium scrap so that India does not have to depend on imported scrap. Aluminium scrap constituted 62 percent of the total aluminium imports in FY20.

While the plan to lower imports of the metal looks strong, there continues to be strong scope for circumvention, which could leave the producers’ efforts ineffective.

“In order to have a check on possible circumvention, we are requesting the government (of India) to establish Aluminium Import Monitoring system and start tracking the Aluminium metal import possibilities into India under various HS codes even before the actual import can happen,” said Duggal.

An import monitoring system has already been established by the government for the steel industry.

“With these developments within the industry Vedanta Aluminium hopes to increase its domestic market share by about 4-5 percent within one year and by another 5-7 percent within next year,” said Duggal.

Vedanta Aluminium contributes to about 40 per cent of primary aluminium consumption market share in India, according to FY20 data.

When it comes to over-all aluminium consumption of India, the company contributes around 17 per cent of the market share, since 60 per cent of country’s aluminium requirement is met completely through imports, Duggal added.

On the pricing front, imported primary products enjoy inherent benefits under various export promotional schemes passed on by the government of respective countries to their exporters along with duty free imports from countries having trade agreements with India.

However, the cost of production in India is comparatively high mainly because of logistics expenses and taxes. If duty free imports are checked, the domestic industry would stand a chance for at par pricing to imports.