Govt initiates safeguard duty investigation on unwrought aluminium imports
Photo Credit: Reuters

The Indian government on Wednesday initiated a safeguard duty investigation into imports of unwrought aluminium into the country.

Unwrought aluminium is a type of aluminium extracted from primary metal or scrap and is imported by India from various countries such as the United Arab Emirates, Malaysia, Russia, South Africa, Oman, Qatar, Bahrain and Thailand.

If the investigation proves that the import surge is affecting the domestic aluminium industry, the Indian government has the option to impose a safeguard duty. Importing countries also have other options, such as introducing anti-dumping duty, to make domestic prices at par.

The investigation initiated by the Directorate General of Safeguards for the 2011-12 to 2015-16 period comes in the backdrop of India’s efforts to protect the domestic steel industry. The application in the case of aluminium was jointly filed by domestic manufacturers including Vedanta Ltd, Bharat Aluminium Co. Ltd (Balco) and Hindalco Industries Ltd.

“After examining the application on different economic parameters, it is seen that prima facie, despite improvement in productivity, increased imports of PUC (alloyed and non-alloyed unwrought aluminium) in absolute term have caused losses to the domestic industry and are threatening to cause serious injury to the domestic producers,” said an official notification dated 19 April.

PUC stands for product under consideration for investigation. The domestic industry had requested for imposition of safeguard duty on imports of alloyed and non-alloyed unwrought aluminium into India for a period of four years.

Experts believe that such steps are needed to protect the domestic industry.

“It is a clear case of dumping of the product into our country, causing severe injury to domestic manufacturers,” said Kalpana Jain, partner at Deloitte Touche Tohmatsu India LLP.

According to the government notification, imports of unwrought aluminium into India has shown a substantial increase from 242,533 million tonnes (MT) in 2011-12 to 432,370 MT till 2015-16, recording an increase of 78% on an annualised basis.

“Industry has also requested for imposition of provisional safeguard duty in view of the steep deterioration in performance of the domestic industry as a result of increased imports of the product,” the notification added.

The domestic aluminium Industry welcomed the government’s move.

“The initiation of investigation is in the right direction. It is in line with what we are representing,” said S.K. Roongta, chairman, Balco.

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