Delayed RODTEP rates for SEZs And EOUs cause 2-3% profit drop in Indian aluminium industry

The aluminium industry in India is currently experiencing a 2 to 3 per cent decline in its profits, primarily attributed to the delay in releasing the Remission of Duties or Taxes on Export Product (RODTEP) rates for special economic zones (SEZs) and export-oriented units (EOUs). In the fiscal year 2023, India successfully exported 2.5 million tonnes of aluminium valued at USD 5 billion.

However, following the discontinuation of the previous Merchandise Exports from India Scheme (MEIS), aluminium exporters are facing economic pressure, as noted by Himanshu Singh, a member of the governing council at the Aluminium Association of India (AAI).

Singh emphasised that the AAI has already submitted a formal request to the Union Ministry of Commerce and Industry, urging immediate action to notify the rates under the RODTEP scheme. Such action is anticipated to significantly boost aluminium exports. He said, "The AAI has already submitted a representation to the Union ministry of commerce and industry seeking urgent intervention for notification of rates under the scheme as this would help boost exports."

In FY23, India's aluminium production reached 4.1 million tonnes, with imports of 2.5 million tonnes, including 1.7 million tonnes of scrap imports. India has invested over USD 20 billion in the aluminium sector, becoming the world's second-largest producer of aluminium.

Despite this achievement, the AAI raised concerns regarding the delayed notification of RODTEP rates for aluminium products manufactured in special economic zones (SEZs) and export-oriented units (EOUs). Collectively, SEZs and EOUs account for more than 30 per cent of India's total aluminium exports. Currently, unremitted taxes and duties account for approximately 5 to 10 per cent of production costs for SEZ-based operations.

The withdrawal of the MEIS scheme, coupled with the absence of favourable RODTEP rates for this segment, has created challenges for the domestic aluminium industry in maintaining competitiveness in the global market, particularly in the face of foreign competition, particularly from China.