Published by : Financial Express
The right focus on reducing our heavy dependency on imports, and well-thought government vision and industry strength, can together write the story of atmanirbharta (self-reliance) in aluminium for India.
The Indian downstream aluminium industry has aligned itself to support the government’s push for Atmanirbhar Bharat. It comes from the vision of being a country that is independent and self-reliant when it comes to manufacturing aluminium products to meet its requirements. The right focus on reducing our heavy dependency on imports, and well-thought government vision and industry strength, can together write the story of atmanirbharta (self-reliance) in aluminium for India.
The per capita aluminium consumption of India (at 2.5 kg) is significantly lower than the global average consumption of 11 kg. With a progressive infrastructure push, there is a massive possibility for an upsurge in aluminium consumption in our country from the current level of 4 million tonnes. But the sufficient downstream capacity of aluminium available within India has not stopped us from importing aluminium downstream products like extrusions, rolled products, foils and other items from China and nearby countries. The rising imports of downstream aluminium products need to be restricted to promote domestic production. The import duty on downstream aluminium products in India is only 7.5%, which is not sufficient against the huge incentives given for exports by China. Many Southeast Asian nations that enjoy free trade agreements (FTAs) with India also continue the unabated dumping of downstream aluminium.
For example, the aluminium foil industry. After the imposition of anti-dumping duty on Chinese aluminium foils, the industry has seen resurgence. With existing mills running at full capacity and a whole host of new projects commissioned since the time of the duty imposition, the country has seen a significant amount of investment, talent building and market-building efforts that will yield huge dividend for the economy. Earlier, the foil industry was choked between high input costs of primary aluminium and cheap imports from China.
At 4.1 million tonnes per annum primary capacity and a downstream processing capacity of 3.9 million tonnes, the Indian aluminium industry has a ready platform to scale up to support the growth trajectory of India. The country obviously needs aluminium products to meet the various end-user requirements in many industries within the manufacturing sector. The growth of the downstream aluminium industry is dependent on two key points—independent recognition (distinct from primary aluminium) and support derived in the form of government policy. The government must consider the demands of the industry and protect the downstream segment by doing away with import duty on primary aluminium. This will make it affordable and help increase domestic consumption of domestically-produced aluminium. Paying a global premium for India-produced aluminium has to stop. Removing import tariffs on primary aluminium and increasing import duties on downstream aluminium could be a practical solution to this issue, which will incentivise value-addition to aluminium within India. Immediate attention to this can safeguard lakhs of livelihoods associated with this industry.
The sheer range of application in aerospace, defence, high-speed rail and many infrastructure areas makes downstream aluminium industry very important. According to a NITI Aayog report, India’s downstream segment comprises of more than 150 companies (both large and midsized) and a bigger base of smaller and unorganised players that strongly needs an export policy for the downstream aluminium segment. In the global market, Indian MSMEs can be competitive only when downstream aluminium is offered a differential status in India, giving it price-parity through focused government policies. The downstream aluminium segment has all along been a visible symbol of progress. Having extensive forward- and backward-linkages to the economy, policy reforms can reduce its import dependency and help make it contribute towards an Atmanirbhar Bharat.