India's aluminium extrusion industry is experiencing severe production challenges, with output falling to 8-9 lakh tonnes from approximately 12 lakh tonnes earlier, according to the Aluminium Extrusion Manufacturers Association of India (ALEMAI). As reported by The Hindu BusinessLine, this represents a significant decline from pre-Iran war levels, leaving manufacturers operating at only 27-30% of their installed capacity of about 30 lakh tonnes. Jitendra Chopra, President of ALEMAI, warned that if the government does not act soon, the industry is currently positioned to lock factories and hand over keys to banks. The capacity utilization has fallen dramatically from roughly 40% to 27-30%, highlighting the severity of the operational crisis.
The industry faces a critical trade imbalance, with imports of aluminium products rising to 15-16 lakh tonnes, significantly exceeding domestic production of 8-9 lakh tonnes. As reported by The Hindu BusinessLine, this means domestic production is only half of import volumes, effectively turning India into a trading hub. Chopra attributed the decline to supply-chain disruptions, energy costs, and expensive raw materials, highlighting the challenging operating environment for domestic manufacturers. He emphasized that when domestic production is just 8-9 lakh tonnes while imports reach 15-16 lakh tonnes - double the production volume - the government is effectively serving importers on a platter.
The industry is seeking removal of the 7.5% basic customs duty on primary aluminium, arguing that it raises raw-material costs for domestic downstream manufacturers. According to The Hindu BusinessLine, the associations argue that domestic aluminium is generally priced at international and import-parity levels, meaning downstream manufacturers bear the duty burden even when sourcing locally. Primary aluminium currently attracts a 7.5% basic customs duty and 10% social welfare surcharge, taking the effective duty to 8.25%. Chopra has specifically called for making this duty zero and providing raw materials at international rates to address the competitive disadvantage faced by domestic manufacturers.
The crisis is affecting employment and working capital access across the sector. As reported by The Hindu BusinessLine, Chopra revealed that 30% of manpower has been slashed in the last one year, while the industry faces problems accessing working capital and reduced order volumes. The associations have also sought a review of inverted duty structures and duty differentials under free trade agreements, where finished aluminium products can enter India at lower effective duties than raw materials used by domestic manufacturers. The employment squeeze is particularly concerning given the industry's reliance on skilled workers across multiple manufacturing units.
The challenges come amid a sharp rise in global aluminium prices, with LME prices rising from around $2,200 per tonne to over $3,700 per tonne, according to the Cable and Conductor Manufacturers Association of India (CACMAI) and the Aluminium Secondary Manufacturers Association (ASMA). Several input costs have increased 20-35% over the past three months, further pressuring domestic manufacturers. ALEMAI represents aluminium extrusion manufacturers, including MSMEs as well as large players such as Hindalco, Vedanta, NALCO and Jindal. Gujarat alone has nearly 100 aluminium extrusion units across Rajkot, Ahmedabad, Vadodara, Surat and Morbi, serving sectors including automobiles, engineering, construction, power and renewable energy.
