India Raises Import Tax on Aluminum, Zinc to Curb China Supplies

  • Finance minister Jaitely announces higher taxes in budget
  • More taxes needed to check inflow of cheap supplies: Vedanta

India will increase taxes on imports of aluminum to curb cheap supplies that have poured in mainly from China, seeking to protect local metals producers.

The duty on primary aluminum will be increased to 7.5 percent from 5 percent, according to the budget document for the financial year starting April 1 released on Monday. The tariff on other aluminum products will be boosted to 10 percent from 7.5 percent while the tariff on zinc alloys will be increased to 7.5 percent from 5 percent, it said.

A slowdown in China’s economy has led to a surge in metals from aluminum to zinc flooding world markets, triggering a rise in trade tensions from the U.S. to Asia. India’s Mines Secretary Balvinder Kumar said earlier this month that the surge in imports of aluminum remained the biggest worry and the country was considering a safeguard tax.

“This is something good but not significant enough for the industry,” Abhijit Pati, chief executive officer of Vedanta Ltd.’s aluminum operations, said by phone. "We are still working on a safeguard tax and other measures.”

Vedanta closed 1.7 percent lower at 70.60 rupees in Mumbai, erasing intraday gains of as much as 6.9 percent, Hindalco Industries Ltd. ended 1 percent lower at 68.75 rupees, while National Aluminium Co. slid 1.2 percent to 32.90 rupees. The benchmark S&P BSE Sensex index dropped 0.7 percent.

India’s aluminum imports rose 4.5 percent to 1.13 million metric tons in the eight months through November, according to data from the Directorate General of Commercial Intelligence and Statistics.

The industry is disappointed by the government’s proposal to double the clean-energy tax on coal to 400 rupees a ton to fight environmental pollution as it will make the fuel costlier for metal producers, Vedanta’s Pati said.

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