Inverted Duty Structure Shake-Up: Boosting Domestic Aluminium Manufacturing

The government is considering revising the inverted duty structure affecting the aluminium industry in the upcoming Budget. This involves reducing import duties on raw materials like calcined petroleum coke, while increasing duties on finished aluminium products to promote domestic manufacturing.

The government is gearing up to address the challenging inverted duty structure for sectors, including aluminium, in the upcoming Budget, according to an official insider. This measure aims to invigorate domestic manufacturing by balancing import duties.

An inverted duty structure occurs when input materials are taxed at higher rates than finished products, complicating tax credits and inflating costs for manufacturers. The aluminium industry, in particular, has submitted a proposal indicating a dire need for revisions in these tax policies.

The industry suggests cutting import duties on key raw materials such as calcined petroleum coke from 7.5% to 2.5%, and raw petroleum coke from 10% to 2.5%. Additionally, they propose increasing the duty on aluminium finished products from 7.5% to 12.5% to protect local manufacturers. The Finance Minister, Nirmala Sitharaman, is expected to reveal details of these changes during the Union Budget presentation in February next year.

(With inputs from agencies.)