It may be worth noting that at the end of March 2019, India had already supplanted China as the world's biggest scrap importer. Between January and March 2019, China's aluminium scrap imports tanked 32 per cent while India's rose 19 per cent.
India’s scrap aluminium imports have been on an upward trajectory because of rising demand for secondary aluminium alloy used in automobile and housing parts. On the contrary, China’s inbound scrap shipments have been on a downtrend after the government there has enforced curbs to contain rising emissions.
It makes sense for India's secondary producers to import aluminium scrap since scrap remelting uses less than 10 per cent of the energy expended typically on an aluminium smelter. Since the secondary aluminium makers were operating on tiny margins, they lacked capital to expand their capacities. The secondary makers aver that scrap imports is a global phenomenon with top producers like China importing it in significant volumes.
But the primary producers quibble about the unchecked growth in scrap imports. According to them, scrap imports moved ahead since the duty was kept at only 2.5 per cent. Ahead of the Budget for 2019-20, the Aluminium Association of India (AAI), the voice of primary aluminium producers- Hindalco Industries, Vedanta and state run National Aluminium Company (Nalco) had called for a four-fold hike in duty on scraps to 10 per cent.
The wrangle over duties started with US imposing 10 per cent levy on imports of steel and aluminium. China retaliated by levying 25 per cent tax on scrap imports from US. With the European Union (EU) enforcing stern curbs on scrap imports, India has turned out to be the favoured hunting ground for scraps. China’s stricter norms on metal scrap and waste imports have also magnified fears of the primary aluminium producers. By 2020, China is looking at zero scrap imports.