Govt mulling imposing MIP on aluminium imports

The Dollar Business Bureau

The Union government is mulling imposing minimum import price (MIP) on aluminium in order to help the domestic industry from cheaper imports. The Revenue Department under the Finance Ministry is in the process of studying low-cost aluminium products being imported from other countries.

The CEOs of several domestic aluminium manufacturing companies including Vedanta, Nalco, Hindalco and Balco met the Finance Minister Arun Jaitley last week with a demand to protect the aluminium industry from cheaper shipments. They have urged the minister to impose strict restrictions on aluminium imports the way it had earlier imposed MIP on steel imports, sources said.

Being the largest metal producer, China is exporting excess aluminium to India amid weak demand. The discussions are underway with the government to find a permanent solution to this problem in creating a domestic supply chain for the aluminium business, according to Tom Albanese, CEO of Vedanta Group.

Currently, the steel industry has several protections from cheaper imports. Only 15% of steel is imported to India from other countries while more than 50% of aluminium is imported into the country from abroad. So, the aluminium industry is more affected by Chinese imports than the steel industry, he said.

India has vast bauxite reserves to produce aluminium. Instead of importing aluminium products from China, it can make use of these bauxite resources in the country. The major aluminium manufacturers of the country have suffered huge losses of around Rs.4,025 crore in FY 2016 compared to the loss of Rs.1,480 crore in FY 2015, as per the industry representation to the Revenue Department.

According to it, rising imports have reduced 60% capacity utilisation of major aluminium manufacturers. This is a massive threat for the Indian aluminium industry.

MECON (Metallurgical and Engineering Consultants) Ltd is conducting an analysis on MIP and would be suggesting its final recommendations by next month-end.