The Aluminium Secondary Manufacturers Association (ASMA), a body of downstream manufacturers and MSMEs, has appealed to the Centre to reduce the import duty on primary aluminium.
Primary aluminium, which accounts for 80% of production cost for the manufacturers, attracts a 7.5% import duty. The consequential increase in selling price makes it difficult for aluminium downstream product makers to compete globally. “The downstream sector is currently reeling under significant challenges that threaten the viability to compete since we are losing market access both domestically and internationally,” the Association patron Anil Agarwal said.
In a representation addressed to Union Minister of Commerce and Industry Piyush Goyal, ASMA cited how free trade agreements like the ASEAN-India agreement allow finished goods to enter India at zero duty, undercutting domestic manufacturers who procure raw material at a 7.5% duty-inclusive price. Such distortion places downstream manufacturers at a distinct cost disadvantage.
MSMEs face price rigidity and are exposed to global price volatility without benefiting from India’s natural cost advantages. Though India produces aluminium at one of the lowest costs in the world, the advantage is not passed on to domestic consumers as the domestic prices for primary aluminium are determined by an import-parity model, aligning with the London Metal Exchange benchmark plus duties. This practice is sustained by a highly concentrated primary market where a few large producers dominate supply and pricing, the Association said.
“We request your kind intervention to provide a level playing field for the domestic industry… urge the government to reduce the import duty on primary aluminium to ensure domestic prices are rationalised,” it said in the representation.