The Aluminium Association of India (AAI), representing the top aluminium producers in the country, has recently shared its suggestions for the upcoming Budget 2023, to drive the continued growth of the aluminium sector. The demand for aluminium, a versatile metal utilized in several strategic industries and the second-most commonly used metal in the world today, is poised to rise exponentially in India, moving from 4 MTPA at present to 10 MTPA by 2030.
An investment of nearly 4 lakh crores is required to scale up production capacities and adequately cater to the rise in demand. Confronted with challenges stemming from rising foreign imports, a declining market share and escalating costs, aluminium industry representatives have sought government intervention for supportive measures to tide over this challenging phase.
The high cost of procuring raw materials is proving a major hindrance in attracting fresh investments. Several key inputs for the sector, such as Calcined Pet Coke, Caustic Soda Lye and Aluminium Fluoride attract high duties of 7.5%, which need to be removed completely, or rationalized to at least 2.5% to boost cost competitiveness.
Citing the increased cost of production due to the rising cost of raw materials, the AAI has also pointed out that at present, nearly 20% of the cost of producing aluminium arises from government taxes alone. This is stifling the development of the aluminium sector, including the domestic scrap landscape.
Further, for the overall development of the domestic recycling landscape, it is crucial to prevent the dumping of low-quality foreign scrap in India. At present, foreign scrap is not governed by any quality standards, presenting safety and environmental risks. The industry representatives have recommended that the necessary quality standards be imposed, along with a duty of at least 10% from the current 2.5% to act as a deterrent from making India a dumping ground of substandard foreign scrap.
Their asks also include:
– Rationalization of railway freight for the movement of critical raw materials like Bauxite, Alumina & Coal, along with priority in rail allocation to the Aluminium Industry, considering its must-run status
-Consider elimination of GST Compensation Cess to support power-intensive industries such as Aluminium
-Ensuring that the domestic market is not flooded by unchecked substandard imports in the form of scrap
Aluminium is a critical pivot around which revolve the fortunes of several critical industries essential to India’s rise. The Union Budget 2023 holds special significance as it presents an opportunity for the government to build a conducive environment to enable the continued development of the domestic aluminium industry. Although the prolonged geopolitical conflict this year has upended hopes for long-term stability, Indian industry has been acknowledged as a bellwether for its economy, representing hope for continued progress amidst the turmoil.