New Delhi: Aluminium Association of India (AAI), apex body representing the entire spectrum of Indian aluminium industry, has sought urgent intervention from the ministry of finance and ministry of commerce and industry to relieve the aluminium industry from the burden of high taxes and duties and bolster global competitiveness for the domestic aluminium industry.
In a letter to the union ministries, AAI ha demanded urgent implementation RoDTEP Scheme (Remission of Duties or Taxes on Export Products) for Indian aluminium industry on a priority basis to make India’s aluminium exports competitive and create a level playing field for Indian exporters vis-à-vis global players in international markets.
Aluminium exports contributed $ 5.7 billion to India’s Forex earning in FY-19, 1.7% of total Indian exports ($330 billion). The industry has massive potential to double the exports to the tune of $10 billion Forex earning in the near future. Government has identified aluminium amongst 12 Champion Sectors, where India can be a global leader and major supplier.
The Indian exports are struggling to retain competitiveness vis-a-vis global players and are at huge disadvantage as globally aluminium industry is heavily supported by major aluminium producing countries specially China, by way of various incentives/subsidies for raw materials, tax benefits and export tax incentives, low interest rate loans . to enhance the cost-competitiveness.
On the other hand, the Indian aluminium industry is struggling with incidence of huge burden of unrebated Central and State taxes and duties, constituting 15% of aluminium production cost which is amongst the highest in the world and adversely impacting its sustainability and cost-competitiveness. These duties and taxes should not be exported as such and should be remitted back to the domestic producers to encourage domestic value addition and export of finished products.
With adequate government support, Indian aluminium exports have the potential to compete and substitute Chinese aluminium exports to major economies in the world. To ensure the global competitiveness of Indian aluminium industry and realize its immense potential to enhance exports with Forex earnings to the tune of $10 billion for the country, it is imperative to reduce the burden of high taxes and support the industry with adequate remission of duties and taxes along with export incentives in the new scheme.
This calls for an urgent immediate need for formulation and implementation of RoDTEP Scheme on priority for aluminium industry by ministry of commerce & industry and ministry of finance with:
· Adequate remission of unrebated Central & State duties & taxes which constitutes around 15% of Aluminium production cost.
· Government to enhance MEIS benefit urgently (Merchandise Exports from India Scheme) from current 2% to 5% for all Aluminium products under Chapter-76, till RoDTEP Scheme is implemented
RoDTEP Scheme is a progressive step towards boosting exports and employment generation in various sectors in the country. There is a provision of Rs 50,000 in the budget for the scheme which will replace the existing Merchandise Exports from India Scheme (MEIS).
Though the scheme was announced by the finance minister on 14th Sept, 2019 and was approved by the cabinet on 13th March 2020, its implementation has not moved much since then. In this regard, the Aluminium industry has already submitted all required audited data to the ministry of finance and DGFT to determine the remission rates for various sectors.
RoDTEP Scheme is WTO compliant and has the provision to reimburse taxes/duties/levies at the central, state, and local level, which are currently not being refunded. The sequence of introduction of the scheme across sectors, prioritization of the sectors to be covered, degree of benefit to be given on various items within the rates set by the Committee will be decided and notified by the Department of Commerce (DoC).
Indian Aluminium manufacturers have made huge investments of Rs 1.2 Lakh crore ($20 billion) to increase domestic production capacity from 2 mtpa to 4.1 mtpa to cater to domestic demand as well as enhance exports of high quality finished Aluminium products.
The industry has created more than 8 lakh jobs and supported over 4000 SMEs in downstream sector. Encouraging domestic Aluminium industry will not only bring large investments and create jobs in the sector but will also create a thrust for other sectors thereby stoking overall industrial and economic activity in the country.