The massive growth of automotive industries in India will raise the consumption of aluminium from 3.6 million tonnes to 7.2 million tonnes in the next five years. This huge consumption would make India import more aluminium scraps.
Boom in the Import of aluminium scraps:
The import rate of aluminium waste by India hiked to 24% from April 2018 to October 2018. Because of this boom, it is predicted that India will be top-ranked in the automotive industry by 2020. The total Manufacture of aluminium in India is about 4 million tonnes and the consumption is about 3.6 million tonnes. The aluminium import by India has advanced in the past two years. The majority of the scraps imported are from Malaysia and South Korea.
Tariff imposed would make India a dump land:
On the decision of US President Donald Trump forcing 25% tariff on Steel imports and 10% on Aluminium and the china to impose 25% import duty on US goods and commodities including all scraps will be a great threat to the countries involved in trading with US and China. They will be charged more to import that would decrease their business. This will also lead a company of US and china to find a domestic processor to get their materials. This will be a fortune for the Metal processor in those countries as more companies will approach them for their metals. This will increase the production of materials.The demand for aluminium scraps will directly affect the scrap prices in the US. International companies will lose their business. China also placed aluminium scrap under its Restrictive import list. According to the report of China’s Ministry of Ecology and Environment, the aluminium and steel scraps will be moved from the unrestricted import list to restricted import list. China has planned to ban the import of scraps and waste by 2020. But India doesn’t have any restriction to import scrap. The affected countries would dump the aluminium scraps into India. So the indigenous scraps will not be used for production. This is a menace to the local aluminium industries too. To avoid this scenario the Aluminium Association of India appealed the government to increase the import duty from 2.5% to 10% otherwise this may lead to a trade war between the US and China. The proposal is being considered by the government to help the domestic industries. Vedanta Group Chairman Anil Agarwal has also asked the government to boost the import duty on scrap aluminium to 10 per cent or otherwise India would become a dumping land. According to the data of Aluminium Association of India, the imposition of 25% import duty on the US diverted the scrap into India by 128%.
India 100% import dependent:
The resource for the production of aluminium is found abundantly in India in the form of raw material and domestic scraps. India still imports aluminium scraps from other countries. India must change its 100% import dependency on other countries, instead the domestic scraps must be encouraged. During the period of 2017-2018, the import of aluminium scraps was 6.32 lakh tonnes, as reported by AAI. The import of aluminium scraps can be limited so that the scraps within the country can be effectively used and the domestic industries will be saved. The import duty on aluminium scraps can be hiked. The recycling of aluminium scraps can be encouraged. This will be energy efficient, when compared to the production from ore. Ajay Kumar Dixit says that India generates sufficient amount of domestic scraps which can replace the entire aluminium scrap imports.
GST threatens Recycling:
The President of All India Non-Ferrous Metal Exim Association said that the reduction of GST rate on the metal scraps to 5% will lead to the utilization of major scrap domestically this will make the Indian industries to survive. Currently, the GST rate for aluminium scrap is 18%. A Few years back India was the low-cost producer of aluminium, but these got affected due to the implementation of GST. The raw material and production cost of aluminium gets higher.
India enriched with resources:
India is enriched with huge resources for producing aluminium. The analysis says that the availability of domestic aluminium scraps is much sufficient for the production. The usage of these aluminium scraps will help the metal processor to forward their business. Also, the GST rate for the aluminium scraps can be dropped to 5%, so that even more the production can be enhanced and the production cost will get lower.