Date | Oct 25, 2016:
As part of their lobbying efforts to impress upon the government to introduce safeguard measures, state-run engineering consultant Mecon Ltd has been hired by domestic manufacturers to prepare a report for exploring the possibility of introducing minimum import price (MIP) on aluminium products.
The development comes close to the ministry of commerce and industry ruling out imposing MIP on aluminium with the view that the World Trade Organization’s (WTO) non-compliant measure will tarnish the country’s image globally. The ministry of mines also favoured the move and was for completion of pending investigations of safeguard duty and anti-dumping investigations on unwrought aluminium.
Unwrought aluminium is extracted from primary metal or scrap. India imports it from various countries such as the United Arab Emirates, Malaysia, Russia, South Africa, Oman, Qatar, Bahrain and Thailand.
Hired by Aluminium Association of India, a lobby group, which includes firms such as Vedanta Ltd, Hindalco Industries Ltd and National Aluminium Co. Ltd (Nalco), Mecon will shortly submit its report to the ministry of mines.
“The consultancy firm had taken cost data from primary manufacturers and analysed it. Now, downstream industry has recently submitted data to them. After going through all this, Mecon will shortly bring out the report,” said a senior government official on condition of anonymity.
Any decision to levy MIP will help domestic aluminium manufacturers who had earlier sought safeguard duty on aluminium imports but the plea was deferred, as reported by InfraCircle on 24 May.
Another government official, who also did not want to be named, said the consultancy firm is close to finalising the report and may be submitted to the ministry by the end of this month or early next month.
“It will be the commerce and finance ministries which will take a final call on imposition of MIP on aluminium products,” said the official
On 21 April, the Directorate General of Safeguards, under the ministry of finance, in its preliminary investigation found that aluminium imports have caused financial losses to the domestic industry and had recommended a provisional safeguard duty of 5% on unwrought aluminium imports for a period of 200 days. However, the Board of Safeguards— chaired by the commerce secretary—deferred it.
Safeguard duty, a WTO-complaint measure, is brought in for a certain time period by the government to help protect domestic industry from cheap imports.
Queries emailed to the spokespersons of the ministry of mines, Mecon, Vedanta, Hindalco Industries and Nalco on 24 October remained unanswered.
Analysts believe that the domestic industry will have to explore overseas markets.
“The domestic capacity is already more than the domestic demand, and the trend is likely to continue at least over the medium term. The total primary aluminium capacity in India will increase by almost 30% following the completion of the ongoing projects of Vedanta. In such a situation, with aluminium imports meeting over a third of domestic demand, Indian manufacturers will have to depend on exports to maintain an acceptable level of capacity utilisation rate for the industry,” said Jayanta Roy, senior vice-president at Icra Ltd, a rating agency.
India recently extended MIP on 66 types of steel products ranging from $341-752 per tonne for two months till 4 December.
(Source: http://www.vccircle.com/)