Mecon recommends 15% minimum import price on aluminium

28 November 2016

State-run engineering consultant Mecon has recommended imposing safeguard import duty or minimum import price (MIP) on primary aluminium products.

The firm, appointed by domestic aluminium industry to recommend the duty, has submitted its recommendations to the Aluminium Association of India constituting domestic aluminium manufacturers including Vedanta Ltd, Bharat Aluminium Co. Ltd and Hindalco Industries Ltd.

“The association has forwarded recommendation on imposing MIP at 15 per cent of London Metal Exchange (LME) price on primary aluminum imports to the ministry of mines. The mines ministry has asked the association to send recommendations on secondary aluminium products as well so that they can be examined and forwarded to the finance ministry in one go,” a senior government official said.

Mecon was hired by the domestic industry soon after the commerce ministry rejected imposing MIP on aluminium citing it was not in accordance with the country’s trade rules. The country’s aluminium industry is pushing for a minimum 15 per cent safeguard duty on all aluminium imports including those from China and West Asia.

As per the industry body’s representation to the government, China – the world’s largest producer and consumer of metals including aluminium- is dumping large volumes of aluminium amid weak demand in the country. The domestic aluminium industry argues that primary aluminium producers have incurred huge losses of Rs 4,025 crore in 2015-16, substantially higher than Rs 1,480 crore loss in 2014-15.

The government in the Union Budget had increased duty on imported aluminium by 2 per cent to 7.5 per cent. However, the local aluminium makers claim that this was offset by simultaneous doubling of green cess on coal. Increase in cost of coal led to rise in power prices that constitute 40 per cent of cost of production of aluminium.

The Centre has provided relief through MIP to domestic steel manufacturers hit by cheap imports and global slowdown in commodity prices.

Source – ET