Aluminium Manufacturers Seek Anti-dumping Duty Exemption on Caustic Soda

Facing challenges from cheap Chinese imports, domestic aluminium manufacturers including Vedanta Ltd, Hindalco Industries Ltd and National Aluminium Co. Ltd (Nalco) have requested the government to exempt the domestic alumina manufacturers from anti-dumping duty on caustic soda.

Caustic soda is a critical raw material for production of alumina, which is an intermediate product for production of aluminium, and contributes around 15% to the cost of alumina production.

“The challenges faced by the aluminium industry are compounded by an unfavourable duty structure. Aluminium is imported attracting customs duty of 7.5%, whereas duty on raw materials in manufacturing alumina attracts duty of equal to or more than 7.5%. The challenges of the industry are further compounded by the imposition of anti-dumping duty on caustic soda of which India is a net importer,” the Aluminium Association of India wrote in a recent letter to mines secretary Balvinder Kumar.

InfraCircle has reviewed a copy of the letter.

Anti-dumping duties are imposed if a country dumps goods in another country at a much lower rate than what it charges at home.

The custom duty on caustic soda is 7.5%, while anti-dumping duty on its imports from China, Korea, Saudi Arabia, Iran, US and Taiwan ranges from $8.75-$133.6 per million tonne.

InfraCircle on 25 October also reported that Aluminium Association of India—a lobby group with firms such as Vedanta, Hindalco and Nalco as members—have hired Mecon Ltd, a government-owned consultancy to prepare a report to explore the possibility of introducing minimum import price (MIP) on aluminium products.

“The alumina industry though consumes only 13% of country’s total consumption of caustic soda, but is a bulk consumer. Domestic caustic soda industry is not able to supply the requirement of the alumina industry due to quantity, infrastructure and logistical constraints. Hence, the industry has no other option but to import it,” the letter further noted, adding that the country is already facing a situation wherein 50% of its aluminium demand is met through imports, particularly from China, where the aluminium industry is subsidised by the Chinese government.

It further said majority of production of caustic soda is in the western part of the country, whereas location of all the primary aluminium producers is in the eastern region of the country in the states of Odisha, Chhattisgarh and Uttar Pradesh.

India’s caustic soda production currently stands at 2.87 MT, while the domestic consumption is 3.36 MT.

In August, the finance ministry had extended the validity of existing anti-dumping duty on caustic soda imports from Taiwan (Chinese Taipei) by one year.

Queries emailed sent to the spokesperson of the ministry of mines and Aluminium Association of India on 18 November remained unanswered.

Meanwhile, the state-run engineering consultant Mecon Ltd in a recent report submitted to the ministry of mines has recommended imposition of MIP on primary aluminium to guard the industry against cheap imports.