Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

About 60pc of aluminium demand in India is met by imports despite India being able to feed its domestic hunger for aluminium and lead & zinc, said  panelists in a webinar held by Federation of Indian Chambers of Commerce & Industry (FICCI) for the discussion of non-ferrous metals and their contribution towards Atmanirbhar Bharat on Oct 22. To be self-reliant, base metals imports need to be cut to a huge extent. Import of non-ferrous metals is rising majorly due to FTAs and skewed tax structures.


Challenges faced by non-ferrous sector

Import of non-ferrous metals is extremely high despite India’s capability of meeting its domestic demand, said most panellists in the webinar. Non-ferrous metals imports have increased due to China dumping goods in the global market and other Asian countries benefiting from free trade agreements with India. This has resulted in the price of imported primary metals being lower than prices offered by domestic producers. 


About 60pc of domestic demand for aluminium is absorbed by imports; India-Japan CEPA, India-Korea CEPA and India- Asean FTA. Imports from China need to be curtailed immediately if India wants to be self-reliant.


Indian non-ferrous producers rued about the high cost of production especially for aluminium and copper in form of high taxes and high power tariffs. In aluminium, 15pc of the cost is taxes and duties while copper producers have to pay 2.5pc in duty on copper concentrates. 


Cost of logistics is extremely high and availability of rakes and connectivity is also a major concern. Approvals for imports of raw materials is slow and so is clearance process which affects the industry’s supply chain. 


Lead and zinc 

For lead and zinc primary producer in India, rising FTA imports are a challenge. Zinc imports have increased by over 1,500pc despite India being self-sufficient, said Harsha Shetty, Chief Marketing Officer of Vedanta. The heavy burden of input tax from central and state government and high royalty in India are among the major challenges faced by producers. India’s royalty regime is one of the highest in the world, said Shetty. 


Insufficient availability of raw materials and slow clearance process, inefficiencies in infrastructure and logistics are among the systematic inadequacies impact the profitability of primary producer of zinc and lead in India.


Different duties and IMPEX policies are applicable on lead scrap (HS 7802) and battery scrap (HS 48) despite the grades being similar. These challenges make domestic companies less competitive and lead to higher imports which is against the Make In India and Atmanirbhar campaigns. 



* Development of logistics infrastructure is crucial for the smooth movement of materials which will improve availability and make producers more competitive. The government needs to provide a level playing field for local manufacturers in India and also help them increase their global competitiveness. 


* There needs to be a correction in inverted duty structure. The availability of raw materials for mining companies needs to be made easier and prices need to be reconsidered. Focus also needs to be towards financial destressing and ease of doing business in India. 


* Mega infrastructure projects need to be rolled out to boost demand for non-ferrous metals to offset the effects of the pandemic.


* Imports from China and other Asean countries needs to be replaced by domestic production. In the next few years, if the production of primary metals does not increase, India is likely to become the net exporter of non-ferrous metals. Production of primary metals needs to be promoted. 


* Private companies should be allowed to enter the mining sector which will lead to more exploration like in Canada and Australia, said Arpan Gupta, Joint Director & Head Mines, Metals & Cement at FICCI.


* The government needs to identify non-ferrous metals industry as a core sector as they have for steel. There should be a National Base Metals Policy similar to that of National Steel Policy 2017. 


* Vehicle scrappage policy needs to be implemented soon to boost demand from the automobile sector, suggested panellists in the webinar. 


India’s consumption of non-ferrous metals per capita is very low compared to the global average in the conventional sense. Non-ferrous metals sector contributes less than 4pc to the GDP but it is capable of delivering more if the government makes supports the sector with policy reforms. India consumes 2.7kg of aluminium per person while other countries consume over 12kgs per person. Indian consumes 1/10th of China’s consumption of aluminium, according to Rahul Sharma, CEO Alumina Business Vedanta Group. Use of non-ferrous metals needs to be promoted to increase consumption. 


Zinc, the galvanizing metal, received good demand as Indian railways opted for zinc-coated rails. India now also has its first continuous galvanized rebar plant which boosted consumption in India. Zinc has excellent anti-corrosive properties and the government must the adoption of galvanized products. India loses 3-4pc of its GDP by not using galvanized steel.


The non-ferrous industry in India went through a tough time during the COVID-19-related lockdowns and restrictions. The non-ferrous industry is slowly returning to 100pc production levels, said SK Roongta ex-Chairman, Steel Authority of India. The thrust on infrastructure development and multiple emerging and innovative uses of base metals including, copper, aluminium, zinc and lead have led to experts believing that they are the metals for future.

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