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After steel, aluminium may get safeguard duty

business Updated: May 31, 2016 06:04 IST

NEW DELHI: After the government helped the steel industry by imposing a minimum import price to keep imports at bay, aluminium manufacturers are lobbying with the commerce ministry for similar benefits.

“The government is re-examining the provisions of imposing either a safeguard or an anti-dumping duty on various grades of aluminium,” commerce minister Nirmala Sitharaman told HT on Monday.

Safeguard duty is a WTO-compatible temporary fiscal measure to protect a country’s domestic industry from cheap imports.

The companies approached the commerce ministry after the finance ministry decided against a safeguard duty on aluminium, threated by cheaper imports from countries such as UAE, Malaysia, Russia, South Africa, Oman, Qatar, Bahrain and Thailand.

In the last fortnight, the heads of aluminium majors such as Vedanta and Hindalco have met the minister seeking a revision.

Vedanta group chairman Anil Agarwal and Aditya Birla Group chairman KM Birla are learnt to have pushed for an immediate imposition of protective duty on wrought aluminium.

“They have sought government support by means of anti-dumping duty or safeguard duty,” Sitharaman said. “I have asked them to give me substantial data so that I can understand the matter and take it further.”

“China and West Asia are dumping aluminium – China as its industry is heavily subsidised and West Asia as power is very cheap there. Electricity accounts for almost 40% of the total production cost. For an industry that employs 750,000 people, it is time that the government created some barriers that will ensure the protection of this large employee base. We are unable to sell it locally due to the dumping,” Hindalco MD Debu Bhattacharya said.

In April, the Directorate General of Safeguards (DGS) had recommended imposition of a provisional 5% safeguard duty on imports of unwrought aluminium for 200 days after a preliminary investigation in the wake of a surge in imports.

Unwrought aluminium is the basic form of the metal. It is processed further to be used in various sectors from construction to automobiles.

The DGS investigation was based on a petition filed by aluminium majors Vedanta Aluminium, Balco and Hindalco, which sought immediate imposition of safeguard measures for a period of four years.

The companies said they have made huge losses between the period 2011-12 and 2015-16.

In the last four years, aluminium prices on London Metal Exchange have come down by over 35% to about $1,660 per tonne from a peak of $2,555 per tonne. The cost of production remains static at $1,800 per tonne. This has resulted in $200 per tonne (about Rs 13,800) loss.

First Published: May 31, 2016 06:02 IST