In a rapidly evolving global metals scene, the Indian aluminium sector has found itself at a critical juncture. The Aluminium Association of India (AAI) has formally called on the government to extend the Remission of Duties or Taxes on Export Products (RoDTEP) scheme for aluminium-producing units operating under Advance Authorisation (AA), Export Oriented Units (EOUs), and Special Economic Zones (SEZs). This intervention, as warned by the industry leaders, is essential to safeguard India’s export competitiveness and domestic manufacturing growth.
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India ranks as the world’s second-largest producer of aluminium, boasting an impressive annual production capacity of 4.1 million tonnes and witnessing investments exceeding USD 20 billion in domestic manufacturing.
At present, close to 45 per cent of the country’s aluminium exports originate from units operating within AA, EOU, and SEZ frameworks. However, the recent withdrawal of RoDTEP eligibility for these units in February 2024 has sparked concerns over escalating production costs and diminishing global market share.
Additionally, in a detailed representation to Finance Minister Nirmala Sitharaman, the AAI has shared that aluminium units in these export-oriented zones face a compounded tax burden. Central and State levies add up to roughly 10 per cent of production costs, a figure that significantly impacts price competitiveness on the international stage.
“Without the RoDTEP benefits, our domestic producers risk losing not only market share but also vital employment opportunities, which could lead to far-reaching repercussions in the broader manufacturing landscape,” the AAI noted, echoing the body's sentiments which are simultaneously shared by industry experts and trade analysts alike.
Recent market analyses have indicated that any delay in extending the RoDTEP scheme could exacerbate the challenges faced by the Indian aluminium industry. Global aluminium prices have shown notable volatility over the past two years, and in such a climate, every percentage point of cost can determine whether an exporter remains competitive. Data from the International Aluminium Institute has brought forth that nations with robust tax relief frameworks have maintained or even increased their market share despite global price fluctuations.
Furthermore, industry reports suggest that export-oriented aluminium units contribute significantly to domestic value addition. The discontinuation of RoDTEP benefits not only jeopardises export volumes but also hampers the ability of these units to invest in modernisation and sustainability initiatives. With increasing international demand for environmentally friendly production processes, any reduction in competitiveness could deter further investment in green technologies—a setback at a time when sustainability is a crucial differentiator in global trade.
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