Hike in aluminium import duty not benefitting companies: Agarwal

New Delhi: Government's move to protect domestic aluminium producers by raising import duty on the metal has been neutralised by doubling of cess on coal, mining baron Anil Agarwal said today.

Budget 2016-17 recently raised customs duty on primary aluminum to 7.5 per cent from 5 per cent, while the levy on other aluminum products was hiked to 10 per cent from 7.5 per cent. The tariff on zinc alloys was increased to 7.5 per cent from 5 per cent.

The move was to counter China flooding world markets with cheap metals from aluminum to zinc as its economy slows down. But the safeguard duty hike has been neutralised by the doubling of clean-energy cess on coal to Rs 400 per tonne made the fuel costlier for metal producers, Agarwal told PTI.

"They have increased cess on coal. It has no benefit to us. Industry is in such a bad shape that 60 per cent aluminium is being imported into India," Agarwal said when asked if he is satisfied by the government's proposal to increase import duty on aluminium.

"They have to give Safeguard Duty. Because China is subsidising to push because they have a huge stock. On steel they have given a Safeguard Duty, when steel import is only 15 per cent," the NRI billionaire told PTI in an interview.

Finance Minister Arun Jaitley has proposed in his Budget speech to double the cess on coal to Rs 400 per tonne.

Aluminium is the commodity of the future. And Safeguard Duty on the metal is a priority and is a very important thing, he added.

According to industry data, total aluminium imports into India have grown by over 159 per cent to 1,563 kilo tonnes (KT) in 2015 against 881 KT in 2011, mainly from China and Middle-Eastern countries.

This has led to imports accounting for 56 per cent of the Indian aluminium consumption in 2014-15, while products of Indian producers account for only 44 per cent.

When asked if the hike in aluminium import duty is too little too late, Agarwal said: "Because they have given us 2.5 per cent and increased the cess on coal. So it is exactly same what we are getting the benefit, we are loosing on coal.

"So the benefit is neutralised. You have to give Safeguard Duty at the particular time to support the industry. The basic thing is that India must have a sense of urgency..."

It takes around USD 1,500-1,700 to produce one tonne of aluminium metal with alumina and power accounting for 40 per cent each of the cost and raw materials as well as others contributing to the remaining 20 per cent.

China accounts for 50 per cent of the world's aluminium production and is in a position to control its prices, which have been declining globally in the last year and a half. The global scenario of low demand and constant production has led to dumping of cheaper metal in India, industry says.

The price of aluminium at London Metal Exchange (LME) has fallen by 37 per cent to USD 1,555 per tonne in November from USD 2,477 a tonne in the year-ago period.