Aluminium Association of India (AAI) has urged the government to continue its Merchandise Exports from India Scheme (MEIS). The association, in a letter on Tuesday, also asked for a raise in the reward rate to 5pc from the existing 2pc on exports of all aluminium products.

 

AAI believes that the government is planning to slash MEIS funds to Rs90bn for the April-Dec 2020, period. In FY 2020, the government had allocated Rs450bn for the scheme. The association states diversion of these funds will impact exports and render Indian producers non-competitive in the international market.

 

AAI added that production of primary aluminium being a continuous process, all the smelters are operating at around 90pc capacity. The drastic drop in the domestic demand has equally affected them. Knowing that it would take long before domestic demand revives, the industry banks heavily on exports to tide over the current COVID-19 pandemic situation.

 

The Directorate General of Foreign Trade (DGFT) stopped accepting new applications to limit the issuance of any more scrips from July 23 onwards. AAI urged that doing so will affect the Indian aluminium exports as they have dropped to $5bn in the FY2020, down by 11pc from $5.7bn in the FY2019-20

 

The apex body of aluminium industry also demanded the insertion of aluminium in Product Linked Incentive Scheme and implementation of Remission of Duties or Taxes on Export Products (RoDTEP) scheme at the earliest.

 

Un-rebated Central and State taxes duties amounting to 15pc of the production cost of aluminium prevalent in India are highest in the world. AAI added that unlike India, China offers various incentives/subsidies for raw materials, tax benefits and export tax incentives, low-interest rate loans to boost up the cost-competitiveness of its exporters.

 

The Indian government recently included aluminium amongst 12 sectors where in the country can be a global leader and supplier. AAI added that the Indian aluminium industry has the potential to double the exports to $10bn soon. 

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