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India mulls 5% duty hike on primary aluminum imports

India's mines ministry is mulling a 5% increase in basic customs duty on the import of primary aluminum products, Live Mint reported Dec. 28.

The proposed scheme aims to help local producers, including Vedanta Ltd., National Aluminium Co. Ltd., and Hindalco Industries Ltd., compete against low-priced imports that make up more than half the country's annual aluminum consumption of 3.4 million tonnes.

In the first half of 2016/2017 fiscal year, aluminum imports accounted for 54% of the 1.68 million-tonne local consumption.

The Aluminium Association of India even reportedly sought a 7.5% increase in the basic customs duty. An official from the mines ministry was cited as saying that a minimum import price of US$2,066 per tonne, as demanded by the industry, is under examination.

Overcapacity in China resulted in a progressive growth of imported aluminum in India, but domestic aluminum producers also suffer from high interest rates, a clean energy tax on coal and a higher power tariff, making them less price competitive against imports.

Reportedly, major aluminum producers have a combined debt of 700 billion Indian rupees.

However, India's domestic consumption of aluminum is expected to rise in the next few years driven by higher demand from industries like automobiles, housing, packaging and power transmission.