Aluminium industry seeks duty remission to compete with Chinese producers
Updated Jun 25, 2020
In a letter to the Commerce and Finance Ministers, the Aluminium Association of India (AAI) has said that absence of any rebate on local duties has added up 15 per cent on the cost of Indian producers which makes the metal uncompetitive compared to major aluminium producing countries, specially China. In China, the industry gets state support by way of various incentives/subsidies for raw materials, tax benefits & export tax incentives, low interest rate loans etc. to enhance the cost competitiveness.
Aluminium exports is a major contributor of forex for the country and it contributed $ 5.7 billion to India's forex earning in FY-19, i.e. 1.7 per cent of total Indian exports ($330 billion). The industry has massive potential to double the exports to the tune of $10 billion forex earnings in the near future, given the necessary support from the government, the association has written.
"With adequate government support, Indian aluminium exports have the potential to compete and substitute Chinese aluminium exports to major economies in the world," the association said in its letter, adding that duties and taxes should not be exported as such and should be remitted back to the domestic producers to encourage domestic value addition and export of finished products.
AAI has urged the to enhance MEIS (Merchandise Exports from India Scheme) benefit urgently from current 2 per cent to 5 per cent for all aluminium products under Chapter-76, till RoDTEP Scheme is implemented.
RoDTEP Scheme is a step towards boosting exports and employment generation in various sectors in the country. There is a provision of Rs 50,000 crore in the budget for the scheme which will replace the existing MEIS.
Though the scheme was announced by the Finance Minister on September 14, 2019 and was approved by the Union Cabinet on March 13 this year, its implementation has not moved much since then. In this regard, the aluminium industry has submitted all required audited data to Ministry of Finance & DGFT to determine the remission rates for various sectors.
RoDTEP Scheme is WTO compliant and has the provision to reimburse taxes/duties/levies at the Central, state, and local level, which are currently not being refunded. The sequence of introduction of the scheme across sectors, prioritisation of the sectors to be covered, degree of benefit to be given on various items within the rates set by the Committee will be decided and notif ied by the Department of Commerce.