How Downstream Aluminium Can Facilitate the Way For Aatmanirbhar Bharat
The right focus on reducing heavy dependency on imports, well-thought government vision and industry strength, can together write the story of self-reliance in aluminium for India
The Indian downstream aluminium industry has aligned itself to support the government of India’s push for ‘Aatmanirbhar Bharat’. It comes from the vision of being a country that is independent and self-reliant when it comes to manufacturing aluminium products to meet its aluminium material requirements.
The right focus on reducing our heavy dependency on imports, well-thought government vision and industry strength, can together write the story of ‘Atmanirbharata’ (self-reliance) in aluminium for India.
The per capita aluminium consumption of India at 2.5 kg is significantly lower than the global average consumption of 11 kg. With a progressive infrastructure push, there is a massive possibility for an upsurge in aluminium consumption in our country from the prevailing level of approximately 4 million tonne. But the sufficient downstream capacity of aluminium available within India has not stopped us from importing aluminium downstream products like extrusions, rolled products, foils and other products from China and nearby countries. The rising imports of downstream aluminium products need to be restricted to promote domestic production and reflect the spirit of ‘Aatmanirbhar Bharat’.
The import duty on downstream aluminium products in India is only 7.5 per cent which is not sufficient against the huge incentives given for exports by China. Many nearby southeast Asian nations having free trade agreements (FTAs) with India also continue the unabated dumping of downstream aluminium. Take for example the Indian aluminium foil industry. After the imposition of anti-dumping duty on Chinese aluminium foils, the industry has seen a resurgence. With existing mills running at full capacity and a whole host of new projects commissioned since the time of the duty imposition, the country has seen a significant amount of investment, talent building and market-building efforts that will yield huge dividends for the economy in the long run. Before that, the foil industry was choked between high input costs of primary aluminium and cheap imports from China.
At 4.1 million tonne per annum primary capacity and a downstream processing capacity of 3.9 million tonne, the Indian aluminium sector has a ready platform to scale up to support the growth trajectory of India. Like the ‘Make in India’, this vision of being a country whose industry is independent and self-reliant will need aluminium products to meet the various end-user requirements. But for this, the downstream aluminium sector needs to be known within the aluminium frame of the country. Its growth story is dependent on the two key points—independent recognition (distinct from primary aluminium) and support derived in the form of government policy.
It would be prudent for the government to consider the demands of the industry and protect the downstream segment by doing away with import duty on primary aluminium. Thus, making it affordable and increasing domestic consumption of the domestically produced aluminium. Paying a global premium for Indian produced aluminium has to stop. Removing import tariffs on primary aluminium and increasing import duties on downstream aluminium could be a practical solution to this issue, which will incentivize value addition to aluminium within India itself. Immediate attention to this can safeguard lakhs of livelihood associated with the sector.
The sheer wide range of applications in aerospace, defence, high-speed rails, and other infrastructure projects is an indicator of the reach the downstream aluminium industry has. As per a Niti Aayog report, India’s downstream segment comprises of 150-plus companies including both large and mid-sized, and a much bigger base of smaller and unorganized players that strongly needs an export policy for the downstream aluminium industry. In the global market, the Indian MSMEs can be competitive only when downstream aluminium is offered a differential status in India, giving it price parity through focused government policies. The downstream aluminium industry has all along been a champion sector and a visible symbol of progress. Having extensive forward and backward linkages to the economy, policy reforms will see it reduce import dependency and make strides facilitating the way ahead for an ‘Atmanirbhar Bharat’.