Aluminium industry seeks continuance of MEIS scheme without any ceiling or limit on claims

New Delhi, Sep 4 (KNN) Engineering Export Promotion Council (EEPC) has urged the Commerce and Industry Minister Piyush Goyal to continue with the Merchandise Exports from India Scheme (MEIS) without any ceiling or limit for aluminium exports to survive the current crisis situation.

In this regard, EEPC sent a letter in wake of DGFT notification, dated September 01, 2020 imposing a limit of Rs 2 crore per IEC on total reward claims under MEIS for exports between Sept-Dec, 2020, which is also envisaging further downward revision to ensure the total claims are within prescribed allocation of Rs 5000 crore, which is a significant cut in the funds outlay for MEIS from Rs 45,000 crore in FY-20.

''This move is a huge setback for Indian aluminium exports, struggling to remain globally competitive due high incidence of unrebated taxes and duties and various global developments including depressed demand and crashed LME Aluminium prices by 30 per cent in the last two years,'' the engineering body said.

The MEIS scheme has been there much before the pandemic and taking it away at this crucial time when the exports are keeping the economy afloat would be a big blow to the GDP which has already seen a drop of 24 per cent in Quarter 1 FY21 on Y-o-Y basis.

''This has created an extremely precarious situation for Indian Aluminium exports which declined by 11 per cent from USD 5.7 billion in FY-19 to USD 5 billion in FY-20, and further will render exports vulnerable and uncompetitive vis-à-vis global players in international markets,'' EEPC added.

EEPC also demanded expeditious implementation of Remission of Duties or Taxes on Export Products (RoDTEP) scheme on priority for aluminium industry to make India’s aluminium exports competitive and create a level playing field for Indian exporters vis-à-vis global players in international markets.

''Being a continuous process industry, all the Indian Aluminium smelters are operating in the country at around 90 per cent capacity. The slump in domestic demand is hurting the domestic aluminium industry and it will take substantial time for the domestic demand to pick up. The only option left for the industry to sustain is to export the Aluminium products to survive the current situation due to COVID-10 pandemic, but the prices are expected to continue to be weak due to demand slump globally,'' asserted EEPC.

Aluminium exports from India are struggling to remain globally competitive due high incidence of unrebated central & state taxes and duties, constituting 15 per cent of aluminium production cost which is amongst the highest in the world. This is adversely impacting the sustainability and competitiveness of the aluminium industry.

''This is in sharp contrast to global aluminium industry which is heavily supported by major aluminium producing countries specially China, by way of various incentives/subsidies for raw materials, tax benefits & export tax incentives, low interest rate loans etc. to enhance the cost-competitiveness,'' EEPC said.

EEPC further said that the aluminium exports are currently eligible for a 2 per cent MEIS reward rate which itself does not provide ample cushion to remain competitive against current bearish market conditions which is likely to last long.

The RoDTEP Scheme for exports is yet to be formulated and implemented by the government, which was announced in September 2019 by the Finance Minister and approved by the cabinet in March 2020. While the domestic industry is trying best to remain competitive, the government support is extremely crucial at this juncture to boost exports and survive this challenging phase.

Government has identified aluminium amongst 12 champion sectors, where India can be a global leader and major supplier. The industry has massive potential to double the exports to the tune of USD 10 billion forex earning in the near future. Aluminium exports which contributed USD 5.7 billion to India’s forex earning in FY-19, i.e. 1.7 per cent of total Indian exports (USD 330 billion).