There has been no change in customs or excise duties in the aluminium industry. The additional levy of eight per cent customs duty, which is non-modvatable to protect the domestic industry, in lieu of sales tax will make imports of aluminium, including scrap, costlier. This is almost contrary to the industry's demand for a reduction of import duty on scrap from 25 per cent to five per cent.The downstream aluminium producers were looking for a change in customs duty on all unwrought metal, semi-fabricated metal and metal scrap from a flat 25 per cent to 15 per cent, 30 per cent, and five per cent respectively.
In 1997-98, the doubling of customs duty from the previous year hit the aluminium semi-fabricating industry by about Rs 7,000 per tonne of the metal used. It was also contrary to the declared general direction of tariffs. The industry had recommended that the duty on fabricated metal should increase to prevent dumping.
A decrease in the duty on metal scrap was justified as recycling requires fiveper cent of the energy required for primary smelting. Modern scrap recycling, which is environmentally benign and can actually upgrade the scrap, requires approximately an investment of about $500 per tonne installed against nearly $5000 per tonne installed for primary metal.
Nalco chairman, S A Johri, who is also the president of the Aluminium Association of Indian (AAI), said that insofar as the aluminium industry is concerned, the Budget is totally silent. There is no change in the customs duty or excise rates on the metal and its products. He said that the AAI had represented to the Union government to reduce the import duty on metal and scrap, which was hiked from 10 per cent to 25 per cent in the last Budget. The Budget seems to have not taken that plea into consideration.
However, he added quickly, it would not affect the secondary aluminium industry much. Since the Indian primary metal producers are maintaining the domestic price on a par with the London Metal Exchange level, the secondaryindustry should not be apprehensive of any unreasonable price rise by the domestic metal producers, he assured.
A statement from Indian Aluminium Co said that an across the board five per cent reduction in credit of Modvat under excise is not in line with VAT scheme and is a retrogade step. Johri, who is also the chairman of the Orissa chapter of Confederation of Indian Industry (CII), however, said "as expected, the Budget is industry and investment friendly. The thrust on infrastructure and development would set off widespread economic activities boosting industrial production and trading."
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
