Shreya Nandi Moneycontrol News
Domestic aluminium makers may not get immediate protection from the surge in imports of the metal into the Indian shores. The wait towards imposition of minimum import price (MIP) could be longer owing to escalating prices at the global benchmark — London Metal Exchange (LME).
Local aluminium prices mirror trends in LME, where prices have toed crossed USD 1900 per tonne, at par with the proposed MIP rate of USD 1,996 per tonne for primary aluminium products, which include ingots, billets and wire rods.
“The Centre is closely monitoring the LME prices. We are in the ‘wait-and-watch’ mode right now. MIP may be imposed if prices at LME start crashing or there is a clear downward trend,” a senior government official told Moneycontrol.
MIP serves as the floor rate below which overseas shipments of specified items are not allowed to enter Indian shores. A rise in global base metal prices would nullify the impact of the trade barrier.
Total aluminium imports into the country increased to 909,000 tonne during April-September FY17, up 23 percent from the year-ago period. The surge in imports was mainly from China, Vietnam, Thailand and Malaysia.
The Commerce Ministry wants to be “cautious” before levying MIP, as it wants to steer clear of flouting WTO norms, the official said, explaining that MIP can be used only as a short-term measure to protect the local industry.
The ministry is watchful of the situation as India has already been dragged to WTO after Japan, in December, filed a complaint against safeguard duty as well as MIP on steel imports.
Top aluminium makers have been pressing the government for immediate measures to arrest the import surge and help local producers realise better prices and margins. Mines ministry has also endorsed their case to the commerce ministry, which can ultimately impose the trade barrier.
They have complained that a slowdown in global demand and the Chinese dumping metal into the Indian shores have depressed prices, increased competition and hit companies’ profitability as they are finding it difficult to sustain their sales in the local market.
Companies such as Hindalco Industries Ltd, Vedanta Ltd and state-owned National Aluminium Co Ltd have claimed that China is offering huge subsidy in power charges and incentive on export of finished and semi-finished products. In addition, India’s free trade agreement (a pact between countries to reduce or eliminate tariff or non-tariff trade barriers) with Thailand, Vietnam and Malaysia has only aggravated the surge in imports.
Hired by the industry, consulting firm Mecon had in December proposed MIP rate of USD 1,996 per tonne for primary aluminium products, which includes ingots, billets and wire rods.
The consulting firm has also recommended MIP price for secondary aluminium products such as tubes, wires and cables. While an MIP of USD 3,000 per tonne has been proposed for aluminium tubes and pipes, USD 2,2275 per tonne has been recommended for wires.
A floor price of USD 2,566 per tonne has been projected for aluminium sheets, plates and strips.
The industry has proposed an MIP on primary and secondary aluminium products, for a period of six months.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!