Apart from Vedanta, Hindalco is the major Indian exporter of aluminium to the US. Their exports to the US constitute primary aluminium like ingot and billets.
In an interview with Business Standard, Anil Agarwal, chairman, Vedanta Resources, said, “President Donald Trump is business-oriented when he talks of America, industry, and jobs. Many smelters were closing down in Ohio and other US states. Imposing this duty (on aluminium) will help those smelters survive.”
On March 8, Trump signed an order on imposing a 25 per cent import duty on steel and 10 per cent on aluminium. India exports roughly 0.3 million tonnes (MT) of aluminium of the 5.8 MT imported by the US.
Agarwal said India was in a similar situation though it was a natural place to produce aluminium because there was abundant bauxite and coal. He said the country needed around 3 MT of aluminium while it imported 1.5 MT.
“Some of the metal is being imported in the form of scrap. Aluminium scrap has a 2.5 per cent duty and aluminium has 7.5 per cent. Probably India has to do a similar thing (like the US) immediately. Aluminium and scrap should have the same duty if its production has to be encouraged,” he said.
An industry insider said most of the imports to India were from countries like China but routed through third countries with which India had free trade agreements.
Asked whether increasing the duty would amount to protectionism, Agarwal said the government should keep the duty structure simple. “There was a time when the duty was as high as 50-60 per cent but now it is very low. When a country like the US, which does not need protectionism, requires to be protected, and India is just growing, you need to hand hold (industry) for some time because our interest cost and input cost are different.”
He said the downstream industry did not lose much because the duty was just 7.5 per cent.
Vedanta produces, besides aluminium, a large number of metals, apart from oil and gas. Being one of the largest producers of iron ore, it is keen to buy Electrosteel, which is undergoing an insolvency resolution but its bid for the beleaguered steel company has been challenged on the grounds that it allegedly violated environmental norms in the Konkala copper mines in Zambia. “It is just like human body, if you want to find fault you can always find one. I have put in the best of bids. Whatever is the decision, we will accept. Nevertheless, even if we have Electrosteel, it will not be even 1 per cent of our business,” said Agarwal.
The Vedanta group’s iron ore business is also facing headwinds because mining stopped in Goa earlier this month. “Three lakh people (300,000) are dependent on mining. Iron ore mines per se are a small portion; a major function is infrastructure but unfortunately the curtains are down. Earlier mining was in suspension, and we were paying salaries. But now we cannot pay.”