The Make in India initiative is expected to drive demand for aluminium as India aim to achieve 25pc of its GDP from the manufacturing sector, indicates a study by the Aluminium Secondary Manufacturers Association (ASMA) and the Indian Institute of Foreign Trade (IIFT) reported by local media.
India’s industrial ambitions, increased urbanization, rural electrification, rail modernization, smart city projects, and other infrastructural projects will boost demand for aluminium. But to improve the competitiveness of downstream industries policy supported is essential. Inverted duties on primary aluminium on one hand and export of primary aluminium on the other, comprise the interest of downstream industries that consume aluminium. According to ASMA, manufacturers have to pay higher for primary aluminium, either imported or domestically produced, to offset high tariffs on imports.
Properties of aluminium including infinite recyclability, lightweight and durable making it an ideal fit for climate change-related requirements. Aluminium is vital for the production of electric vehicles and local manufacturing of defence equipment and development for India’s aviation sectors. With the emphasis on decreasing CO2 emission in the transportation sector, adoption and manufacturing of Hybrid/ Electric Vehicles under the FAME Scheme will also boost demand.
India’s per capita aluminium consumption is 2.5kg compared to a global average of 11kg. To reach the per capita consumption of 11kg, India’s annual consumption would increase by 16mn mt. The annual primary aluminium production capacity in 2019 was 4.1mn mt while downstream capacity was 3.9mn mt.
In Apr-Dec 2020 period, primary aluminium output fell by 2.9pc to 2.65mn mt from the prior year, which is a small drop compared to other metal production amid the pandemic. For the full year, primary production is expected to fall by 3.5-4pc from the prior year with higher prices and higher demand from end-users to boost production in the fourth quarter, according to Care ratings.