The Business Bytes
TBB BUREAU
BHUBANESWAR, JUNE 22, 2021
India’s import of bauxite, a raw material used for manufacturing aluminium, has caused a foreign exchange (forex) loss to the tune of Rs 390 crore during the April-June quarter of 2021, according to the data released by the Indian Industrial Value Chain Collective, today.
The Indian Industrial Value Chain Collective (IIVCC) represents organizations involved in the industrial production and consumption supply chain activities across India.
“For the first quarter of 2021 (April to June 10), this totals to a staggering USD 51.97 million (Rs 390 crore), which otherwise should have belonged to the people of India, with a significant share going to the participants in the value chain of extraction, transportation, processing and supply of bauxite and its end output,” IIVCC data said.
Despite India having the fifth-largest bauxite deposit in the world with reserves of over 3.8 billion tonnes, aluminium industries in the country continue to rely on imported bauxite, said Abhay Raj Mishra, Member of IIVCC and President of Public Response Against Helplessness and Action for Redressal (PRAHAR).
It has caused a forex loss of 571 million US dollar (about Rs 4,400 crore) in the past six years, he added.
“For every single mine auctioned, there is a potential to garner Rs 5,000 crore for the exchequer and create 10,000 livelihood opportunities. The positive ripple effect that this could have on the socio-economy of the region is significant,” Mishra said.
Bauxite import has increased 300 per cent in the past six years, according to data published in the Import-Export Databank, Ministry of Commerce.
The state most affected due to this forex loss is Odisha which has nearly 50 percent of the country’s bauxite reserves and 25 percent of its coal reserves, both of which are the primary raw materials for aluminium production.
Odisha is the largest aluminium producer in India, with a production capacity of 2.7 million tonnes per annum. The state has attracted investments of over Rs. 1.4 lakh crore to make it the ‘aluminium capital’ of the nation. Yet, instead of being able to leverage Odisha’s rich mineral geology, manufacturers are forced to import bauxite, compromising the viability of the aluminium industry. Further, Odisha’s population is yet to see its domestic natural deposit translate into economic development.
It is a matter of great concern that despite aluminium’s relevance and recognition as one of the 12 champion industries, no Metallurgical Grade Bauxite Mine has been successfully auctioned in the last six years since the inception of MMDR Act 2015. This has resulted in planned new investment of over Rs 50,000 crore in the Aluminium sector being put on hold. Further, the unviable and arbitrary method of determining the Average Sale Price (ASP) of bauxite, renders the ex-mine price of the ore inflated by 300 percent to 400 percent.
It is no secret that aluminium is a metal of strategic importance for India, and has a great multiplier effect on downstream industries and MSMEs. However, it is reliant on India’s bauxite mining capacity to a large extent.
With the economic setback caused the pandemic, it is critical for India to start auction of its bauxite mines to strengthen the aluminium industry. Successful auction of bauxite mines will further attract huge investments wherein fresh investments of over Rs 2 lakh crore are envisaged in Aluminium Sector to meet the growing demand.
By properly leveraging the country’s latent natural resources, India will not only save precious foreign exchange, but also generate huge local employment opportunities and yield rich socio-economic dividends for the state.
