Study done by Lekshmi R Nair and D Dhanuraj of CPPR, to evaluate the effect of tariff hikes on Indian aluminium industry.
Highlights of the study are:
- High tariffs on imported aluminium products, raw materials and aluminium scrap constrain consumption opportunities of aluminium in India
- Per capita consumption of aluminium in India is negligible at an average of 1.4 kg as against the global average of 8 kg, while India has the fifth largest bauxite reserves in the world
- Aluminium in India is utilised in only 300 applications compared with over 3000 in developed countries, showing the need for leveraging the consumption opportunities of aluminium in the country
- The aluminium scrap has an import duty of 2.5 percent in India compared with zero import duty in competing nations.
- Three major Indian players are involved in the production of primary aluminium in the smelting phase which is very energy intensive whereas more than 1000 players in the unorganised secondary aluminium sector producing Aluminium from the scrap
- High tariffs are privileges granted to the primary aluminium sector to please the powerful primary aluminium producers in the country
- High tariffs result in high prices of aluminium, which erode the competitiveness of the downstream and value-added sectors consisting mainly of SMEs that contribute more to the Indian economy than the primary aluminium sector
- The cheap stainless steel utensil sector had a market size of Rs 50000 crore in 2014, while that of the aluminium utensil sector was only Rs 3200 crore
- The aluminium utensil industry is projected to grow by 15 to 20 per cent in the next few years
- Removal of tariffs will increase aluminium availability in the country, leading to quality of life improvement of low- and middle-income consumers
To read the study click here: Evaluation of the Effects of Tariff Hikes on Indian Aluminium Industry
Dr Lekhmi Nair was Research Consultant with CPPR. She has a PhD (Economics) and MPhil (Applied Economics) from JNU/CDS Trivandrum and a Masters in Statistics.