KOLKATA (miningweekly.com) - Ahead of India’s Union Budget 2016, the domestic aluminium industry has urged the government to take a cue from Malaysia and Indonesia to ban bauxite exports from the country.

In a communication, aluminium majors including National Aluminium Company (Nalco) and Hindalco Industries, have sought that the government completely ban bauxite exports. Alternatively, the government could hike the export duty to 50%, up from the current 20%.

Domestic aluminium producers have justified the demands pointing out that China, the prime destination of Indian bauxite, imported the raw materials, value adds with export rebate provided by the Chinese government and shipped back cheap finished products to India, undermining the economic viability of local value addition.

According to an official in Nalco, Indian bauxite exports have risen by 45% over the past 12-months while its share of imported aluminium products from China was up 51%, up from 40% a year ago.

The domestic industry has also demanded that the forthcoming budget correct the prevalent ‘inverted duty structure’ wherein raw materials and inputs attracted a higher rate of import duty than finished product and thereby acted as a dis-incentive to domestic value addition.

For example; key input for aluminium smelting like caustic soda and aluminium fluoride attracted a customs duty of 7.5% while finished aluminium products were levied a customs duty of 5%.

While the forthcoming budget provisions to be proposed before Parliament were under wraps and key officials remained unwilling to comment, indications were that the government would accede to some demand of the domestic industry.

Though unconfirmed by government officials, industry sources said that the Finance Ministry had given positive indications that a 10% safeguard duty on aluminium imports was under “active consideration”. The government had already imposed a 20% safeguard duty on imported steel products and a similar import protection for the aluminium industry could be on the cards.

It was pointed out by industry sources that the Secretary to Ministry of Mines, the administrative department governing the aluminium sector, had already officially stated that a six-month safeguard duty on alumimium imports had been recommended for imposition to the Finance Ministry.

However, no information where forthcoming on government response to industry demand for increasing customs duty on primary aluminium to 7.5% from 5% and that on downstream products to 10% from 7.5% at present.