Aluminum industry urges govt to reduce basic customs duty on critical raw materials

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The aluminium industry has urged the government to reduce the basic customs duty on critical raw materials like aluminium fluoride, stating that high import duties are a huge disadvantage as they make Indian finished goods costlier and uncompetitive in the international markets.

"To improve the cost structure of the Indian Aluminium industry and enhance competitiveness, it is requested to reduce the basic custom duty on the...critical raw materials," the Aluminium Association of India (AAI) said.

In its suggestions to the government for the upcoming Union Budget 2020-21, the aluminium industry said the basic customs duty on raw materials like aluminium fluoride, caustic soda lye and green anode/pre-baked carbon anode should be reduced to 2.5 percent from current 7.5 percent.

"The high import duties on raw materials is a huge disadvantage for domestic aluminium producers which are heavily dependent on imported raw materials. It results in Indian finished goods (getting) costlier and uncompetitive in international markets, rendering negative protection against cheaper imports of finished products, and discourages domestic value addition within the country," it said.

AAI has also suggested to the government to increase import duty on "aluminium scrap (HS Code 7602)" at par with primary aluminium metal to 10 percent from the present 2.5 percent in a bid to encourage recycling of domestic scrap and restrict increasing scrap imports.

The primary aluminium industry is facing severe threat from the increasing import of aluminium scrap, which constitutes around 58 percent of the total aluminium imports in FY 2019-20, resulting in forex outgo of Rs 17,200 crore, it said.

AAI has also asked the government to eliminate high cess on coal (Rs 400/MT) to support the power intensive industries like aluminium and retain competitiveness of the domestic industry.

Finance Minister Nirmala Sitharaman will be presenting her second Union Budget on February 1.