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Budget 2020: Aluminium industry seeks bold reforms; says rising production cost major worry

Mayank Kumar
Budget 2020, Union Budget 2020 India, Budget 2020 India, Budget 2020-21, aluminium industry, aluminium association of india, aluminium imports, aluminiumm scrap, aluminium import duty

Union Budget 2020 India: Aluminium Association of India has suggested a major overhaul in the import duty structure to reduce the production cost of Aluminium products. The industry body has asked the government to reduce the import duty levied on Calcined Petroleum Coke and Caustic Soda Lye, the two major raw materials for aluminium products manufacturing.  The association has demanded reduction of import duty on CP Coke from 10 per cent to 2.5 per cent and Caustic soda lye from the current 7.5 per cent to 2.5 per cent. The Caustic Soda Lye is probably the biggest contributing factor for the rise in production costs of aluminium products accounting for almost 20 per cent while the CP Coke accounts for 8-10 per cent of production costs. The association has also asked the government to take a cue from China that has slapped 25 per cent import duty on Aluminium scrap and planning to completely ban scrap and waste imports by the end of this year to prevent itself from becoming a dumping ground and protect competitiveness in the market for the homegrown Aluminium products.

The union government had increased import duty on CP Coke from 2.5% to 10% in December 2017 to put a restriction on its import as it was being used for the fuel process. The association has documented that the Alumium industry doesn't use CP coke suitable for fuel purposes rather it uses non-fuel-grade petroleum coke as a raw material. The association has assured against the surge in imports by citing a Supreme court order dated October 9, 2018 which restricts Aluminium industry from importing CP coke as raw material more than 0.5 million tonnes.

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India is a nett importer of caustic soda and the Aluminium industry is a principal beneficiary of the imports as it consumes 60 per cent of the country's import. Aluminium industry's demand for caustic soda can't be fulfilled from the domestic sources due to constraints in quantity, infrastructure and logistics, the association suggested. 

Aluminium consumption in India has seen a massive surge since the year 2011. The annual consumption of Aluminium has shot up by 80%, from 2207 kilo tonnes to 3972 kt and interestingly import of Aluminium has increased by double of demand by 164% from FY 2011. The aluminium import in FY 2019 increased to 2318 kt from 878 kt in FY 2011.