New Delhi, January 25 (IANS): As India’s economy strives to grow at 9% and above over the next few years, a major challenge for the country would be to rebalance its energy needs in favor of renewable sources by 2030 to 50% in line with the Paris agreement.
This is where the aluminum industry will play a bigger role than ever. Strong growth in electric vehicles, renewable energy, modern infrastructure, energy-efficient consumer goods and greater reliance on strategic sectors such as aerospace and defense will lead to growth in electricity consumption. aluminum at a CAGR of 10% or more. For example, the use of aluminum in the EV battery is 40-50% more than in a normal ICE. Being 3 times lighter than steel, it contributes to energy efficiency, making it an effective choice for electric vehicles.
However, the Indian aluminum industry has been struggling to revive for two years following the unprecedented Covid pandemic. The declining market share of domestic producers with surging imports coupled with a significant increase in costs for primary producers due to increased input costs of critical raw materials, escalating ocean freights and logistics costs due to the shortage of containers, the current coal crisis situation, etc., limit the industry. ability to sustain the country’s future at a time when India cannot rely solely on import sources to fuel this growth.
To relieve the sector, it is urgent to review the fee structure. The basic customs duty on aluminum and aluminum scrap is not in line with other non-ferrous metals like zinc, lead, nickel and tin, which is a huge disadvantage for domestic producers of aluminium. The industry expects an increase in the tariff rate of the basic customs duty or the maximum customs duty rate from 10% to 15%. Currently, tariffs on primary aluminum are 7.5%, downstream aluminum is 7.5%-10%, and scrap aluminum is only 2.5%. This is the reason why, despite the significant presence of primary aluminum capacity and the potential to generate enough domestic scrap, India’s scrap consumption is 100% dependent on imports. The way forward is to increase tariffs on scrap aluminum from 2.5% to 10%.
The primary aluminum industry is seriously threatened by the increasing import of aluminum scrap. The share of scrap in total imports increased from 52% in FY-16 to 66% in FY-21. resulting in Forex Outgo of $2 billion (Rs 15,000 crore).
Also affecting the Indian industry are China’s renewed measures to restrict imports of scrap metal through the National Sword Policy, resulting in an increased influx of scrap metal into India. China has imposed a 25% tariff on aluminum scrap imports from the United States and placed aluminum scrap on the restricted import list from July 2019, with the intention of completely ban all imports of scrap metal and scrap. Post that the share of imports from the United States in China’s total aluminum scrap imports fell from 53% in 2017 to just 16% in 2019. India has overtaken China as the largest global importer of scrap aluminum due to Chinese measures. As a result, the entire global scrap metal chain is shifted to India in the absence of any quality standard or BIS standard for scrap metal recycling/use and imports in the country. A major threat comes from US scrap metal imports, as the US diverts a large volume of scrap metal to India, since the EU and other developed countries have strict standards for scrap metal. The share of imports from the US in India’s total scrap imports increased from 8% in FY16 to 24% in FY21.
This precarious situation can be solved by protecting the national industry against these non-essential imports in the next Union budget.
The industry is demanding an increase in the basic customs duty on chapter 76 (aluminum and articles).