The Silent Erosion: Can India's Aluminium Industry Withstand the Influx?

In the bustling heart of India’s industrial landscape, a quiet — yet increasingly desperate — cry is echoing from the aluminium sector. It's a plea for survival, you could say, a fervent call to arms against an unrelenting tide of cheap imports that threaten to undermine billions in investment, millions of livelihoods, and, honestly, the very spirit of 'Make in India' and 'Atmanirbhar Bharat'. The Aluminium Association of India (AAI) isn’t just voicing concerns; they’re painting a stark picture of an industry pushed to the brink.

Consider this: in the third quarter of the fiscal year 2024 alone, imports of aluminium and its scrap surged by a staggering 21% compared to the previous year. That’s 669,000 tonnes flooding the market! And if current trends hold, India is on track to import a record-shattering 2.7 million tonnes for the entire fiscal year. Think about that for a moment. This means, for the second year running, India — a nation with robust domestic production capabilities, I might add — will be a net importer of aluminium. It feels almost counterintuitive, doesn't it?

The lion's share of this deluge? It’s coming primarily from places like China and the ASEAN nations. And here’s the rub: much of this metal is priced below the global benchmark, the London Metal Exchange (LME). So, on one hand, domestic producers are investing heavily in advanced facilities, adhering to stringent environmental norms, and supporting a vast ecosystem of jobs. But then, they’re forced to compete with imported goods that, for all intents and purposes, aren't playing by the same rules – or at least, not the same cost structures. It’s a tough pill to swallow, frankly.

The impact, as the AAI gravely points out, is far-reaching and deeply unsettling. Domestic aluminium smelters, which once hummed at 90% capacity, are now idling at a concerning 70-75%. This isn't just about statistics; it translates directly into a real threat to the 2 million individuals employed, the 5,000-plus MSMEs that rely on this sector, and the immense $25 billion in capital investment that underpins it all. It’s a precarious situation, and one can’t help but feel the anxiety simmering beneath the surface.

So, what's the solution, according to those closest to the fire? The AAI has put forth a clear set of recommendations. They’re urging the government to increase the Basic Customs Duty (BCD) on primary aluminium to 10% from the current 7.5%, and, perhaps even more critically, to hike the duty on aluminium scrap to 15% from a paltry 2.5%. But it doesn’t stop there. They also advocate for the immediate removal of duty-free aluminium imports under existing Free Trade Agreements, particularly those with ASEAN countries. And, perhaps a crucial detail, a thorough review of all current FTAs to address what they perceive as loopholes and potential circumvention of duties.

Because, ultimately, this isn't merely a sectoral squabble over trade percentages. It’s about securing the future of a strategically vital industry – an energy-intensive sector, yes, but one that forms the backbone for countless other manufacturing processes. It’s about ensuring that India’s ambitious goals of self-reliance and boosting domestic manufacturing don’t get washed away by a flood of cheap imports. It's about protecting what we've built, and honestly, what we continue to strive for.