Govt support sought to curb rising aluminum scrap imports
In FY20, there has been a 327% increase in the imports of aluminium scrap from US into India compared to the levels in FY15
image for illustrative purpose
New Delhi: India has been caught in a pincer by a torrent of cheap inflow of aluminum and scrap imports majorly from China as well as the United States.
In FY20, there has been a 327 per cent increase in the imports of aluminium scrap from US into India compared to the levels in FY15.
India has overtaken China as the world's largest importer of aluminum scrap, and the country has been adversely impacted due to recent global developments and US-China trade war further fuelled by China's National Sword Policy measures to cut Scrap Imports substantially with stringent scrap standards and inclusion in restricted list of imports, government quota for import, and 25 per cent tariffs aluminium Scrap imports from USA.
As India is a natural market, entire global chain of scrap has virtually shifted to India in the absence of any quality/BIS standards for recycling that most countries have established to protect the environment. The absence of any stringent tariff and non-tariff barriers to check scrap imports are has created a precarious situation for Indian aluminium industry and challenging its sustainability. Such high level of imports despite domestic capacity is also not in the spirit of country's vision to become an Atmanirbhar Bharat.
India is the third largest producer and consumer of aluminium globally, still Indian aluminium industry is currently plagued by increasing aluminium and scrap imports.
Despite having sufficient domestic production capacity of 4.1 mtpa to cater country's aluminium demand of around 3.7 mtpa, currently 60 per cent of country demand is being met through imports primarily scrap imports.
The Import share in the last two fiscals increased from 54 per cent in FY18 to 58 per cent average in FY19 and FY20., also there has been a substantial increase in Scrap imports as evident by share of Scrap in total aluminium imports increased from 52 per cent to 67 per cent in last 5 years. This also resulted domestic market share for Indian primary producers declining from 60 per cent in FY11 to 40 per cent in FY20. and huge Forex out go of Rs 31,000 crore in FY-20, i.e., 1 per cent of country's total import bill.
This comes at a time when the Indian government is preparing to introduce a vehicle scrappage policy that would lead to scrapping of around 28 million decade-old vehicles, and that should ensure enough supply of indigenous scrap availability for domestic recycling.
The Indian aluminium industry has sought immediate Government support to tide over this challenging phase by means of supportive measures in the forthcoming Union Budget 2021-22. The domestic industry has sought Government intervention to curb imports by raising the basic custom duty on primary aluminium and scrap imports to 10 per cent from current 7.5 per cent and 2.5 per cent respectively, with scrap duty at par with primary metal in line with other non-ferrous metals like copper, zinc, lead, nickel, tin etc.
