India's Aluminium Sector Faces Cost Squeeze

India's aluminium extrusion sector is poised for substantial growth, with demand projected to increase by approximately 10% annually over the coming five years. This expansion is anticipated to be driven by burgeoning industries including data centres, renewable energy projects, electric vehicles, and semiconductor manufacturing.

The industry, which includes around 400 MSME and medium-sized units generating approximately Rs. 75,000 crore in annual revenue and supporting one million jobs, is currently grappling with significant financial challenges. A sharp increase in raw-material prices, estimated between 30% and 40% post the Hormuz crisis, coupled with a 30% rise in energy costs, has created substantial working-capital requirements.

Manufacturers are finding it difficult to pass on these increased costs due to competition from imported value-added aluminium products. The sector, with an installed capacity of 3 million tonnes per year, is currently operating at only about 0.8 million tonnes. To address these issues and boost competitiveness, the Aluminium Extrusion Manufacturers Association of India (ALEMAI) is seeking a reduction in import duties on ingots and billets and an increase in duties on finished aluminium products.