July 1(LTIT) –India has started mulling measures to reduce import of aluminium amid a spike in shipments of the metal from China. Ministry of Mines has constituted an Inter-Ministerial Committee (IMC) to analyse import curbs in aluminium and also propping up the domestic smelters of the metal to substitute overseas supply.

The move comes amid rising border tensions between the two emerging Asian economies even as government departments in New Delhi are discussing possible measures to restrict “cheap” and “low quality” Chinese imports.

More than 60 percent of India’s aluminium demand is met through imports and China contributes 16 percent to the import basket of the metal. Other countries that supply the metal to India include the US, Malaysia, the UK & the UAE.

In fact, as per Industry estimates, 95 percent of imported pressure cookers are made in China. Moreover, 98.4 percent of imported non-stick aluminium utensils, 91.6 percent of imported aluminium utensils and more than 96 percent of imported aluminium sanitary are parts are imported from China.

The inter-ministerial panel has been tasked with analysing aluminium import trends and suggest course correction measures. The panel will also look at ways to substitute import and discuss avenues to impose antidumping duties.

In FY19, aluminium imports from China grew 58 percent at 380 (Kilo Tonne) kT vs 238 kT in FY18. The trade deficit between India and China on the metal widened by a whopping 369 percent from $248 million in FY11 to $1.16 billion in FY19.

China also has almost 80 percent share of India’s secondary aluminium products, which includes foil, tubes, doors, windows, nails, staples, screws, etc.

Aluminium Association of India has suggested the government to impose 12.5 percent import duty on secondary aluminium products. The industry has also suggested an increase in basic customs duty on primary aluminium import to 10 percent from 7.5 percent.

Similarly, a hiked customs duty at 10 percent has been sought for aluminium scrap and waste, which has seen an unprecedented surge in imports due to the low custom duty of 2.5 percent.

Scrap import has increased from countries like the US, the UK, the UAE, Saudi Arabia, and Australia. The US is the biggest exporter of aluminum scrap, China imposed 25 percent duty on US scrap that is now being diverted to India.

In FY20, India's aluminium capacity stood at 4.1 Million tonnes (MT) as against 2.2 MT of consumption.