Daijiworld Media Network – New Delhi
New Delhi, Jul 19: Downstream aluminium manufacturers have urged the Centre to reduce customs duty on both primary aluminium and aluminium scrap, saying the existing tax structure has placed micro, small and medium-sized enterprises (MSMEs) under severe cost pressure and weakened their competitiveness.
The demand comes at a time when MSME manufacturers in the aluminium value chain are grappling with higher global metal prices, rising freight costs and energy price volatility.
Industry representatives said a reduction in customs duty would lower input costs for downstream industries, improve capacity utilisation and boost exports. However, such a move could face opposition from primary producers, who benefit from the current import-parity pricing environment.
In a joint representation submitted recently to the Union Ministry of Mines, the Aluminium Secondary Manufacturers Association (ASMA), the Cables and Conductors Manufacturers Association of India (CACMAI) and the Federation of All India Aluminium Utensils Manufacturers (FAIAUM) said the effective import duty of 8.25 per cent on primary aluminium and 2.75 per cent on aluminium scrap has enabled domestic producers to price metal at import parity, putting downstream manufacturers at a disadvantage.
The associations noted that India's per capita aluminium consumption stands at 2.5 kg, significantly below the global average of 11 kg, but said the more pressing concern is the steep rise in input costs.
According to the industry bodies, profit margins of downstream MSMEs have shrunk by as much as 70 per cent in recent years, while input costs have increased by 20 to 35 per cent in the past three months alone.
They argued that the present duty structure has created an inverted duty regime, with finished aluminium products entering India under preferential free trade agreements at near-zero duty, while imports of primary aluminium continue to attract higher customs duty.
The associations said the situation has adversely affected sectors including cables, conductors, power transmission, energy storage, extrusions, foundries and recycling.
They also expressed concern over the European Union's Carbon Border Adjustment Mechanism, stating that it could further impact the competitiveness of Indian aluminium exports.
Referring to the Ministry of Mines' vision document, the industry bodies said the goal of increasing value addition from domestically produced alumina could be achieved only if primary aluminium is made available to downstream industries at competitive prices.
The associations have sought a reduction in the basic customs duty on primary aluminium and aluminium scrap and said they are willing to present their case before the ministry in person.