• Aluminium is the second most used metal in the world after steel with an annual consumption of 88 MMT.
• It is also the fastest growing metal which has grown by nearly 20 times in the last sixty years (compared to 6 to 7 times for other metals).
• The Aluminium industry comprises two basic segments: upstream and downstream.

1. The upstream sector produces primary Aluminium from raw materials via bauxite mining.                                                                                
2. The downstream sector comprises of processing of Aluminium into semi-finished Aluminium goods such as rods, bars, castings, forging, etc.

• India is the 4th largest Alumina Producer, 3rd largest Aluminum Producer and 5th largest consumer of Aluminum.
• Its consumption in India at 2.5 kg/capita is much less compared to the global average of 11kg per capita.
• It contributes 2% of manufacturing GDP (steel 12%, cement 9%) and this is expected to move up with consumption growth. This growth is critical for India’s industrial vision of achieving 25% of GDP from manufacturing by 2022.
• It has 5 th largest bauxite reserves in the world. Orissa (largest producer), Gujarat, Jharkhand, Maharashtra, Chhattisgarh, Tamil Nadu and Madhya Pradesh are the prominent bauxite producing states in India.

Importance of Aluminium Industry

• Aluminium is considered a strategic sector by various industrialized economies due to:

1.  high linkage effect- forward linkages with key sectors like aviation, defense, auto, electricity, construction, packaging, machinery, marine etc. and backward linkages with mining, chemical industry, power, machinery
2.  high market potential
3.  high technological intensity
4.  high value addition

• Aluminium is also one of the critical metals for world’s commitment towards 2015 Paris commitment of low carbon footprint.

1.  According to US Department of Energy, auto industry estimates that 6-8% fuel savings can happen for every 10% weight reduction by substituting aluminium with other heavy materials.
2.  Aluminium is also a durable metal with its life span in building and construction ranging between 40- 50 years.
3.  Aluminium can also be endlessly recycled with only 5% of energy & emissions needed to produce a new aluminium product.
4.  Aluminium availability is critical to achieve low carbon footprint using wind, solar and energy storage batteries as per a World Bank study 2017.

• Aluminium is also a strategic metal for national defense and security. It is widely used in making various ammunition components, parts for missiles and missile batteries, tanks, armoured vehicles etc.
• The industry also has a high direct and an indirect employment multiplier creating close to 800,000 jobs. Plants are generally based in the hinterlands of
the country and aid in generating peripheral employment and development of the region.

Issues with Aluminium industry in India:

• Energy: Amongst the largest producers of aluminum like Canada, Russia, Middle East, Norway and China, India has the highest cost of production. This can be attributed to high power cost in India.

 Power is a critical input for Aluminium industry accounting for almost 30-40% of their cost of production. Coal subsidies in various Aluminium producing countries gives an edge to them over Indian companies.

• Mining: Bauxite mining is facing various issues such as:

1.  Delays in grant of environmental Clearances, Forest Clearances, other statutory clearances causing significant development risk.
2.  Land acquisition issues in mineral rich areas.
3.  Procedural issues between Centre, State and bidders in matters of bloc allocation.
4.  Lack of a robust geological database of bauxite reserves

• Infrastructure issues:

1.  Absence of railway connectivity and transport infrastructure in several remote mineral rich areas.
2.  Increased cost of transportation of Alumina and Bauxite.
3.  Costly infrastructure for disposal of Fly-Ash and Red Mud is also an issue.

• Scrap Recycling: Aluminum recycling process is less capital intensive and requires only 5% of energy to produce aluminum compared to primary route.

1.  India is the 2nd largest importer of scrap behind China. Despite significant presence of primary metal, India’s consumption of scrap is 100% import dependent (in contrast China’s scrap import ratio is 21%). This reflects the poor domestic scrap recycling infrastructure India has.
2.  Recycled aluminum sector is highly fragmented with around 10 medium sized players and over 150 to 200 small players due to low entry barriers & capital costs.

• Trade Policy and FTA’s: The aluminium sector has not benefitted from signing of FTAs with ASEAN, Japan and Korea, etc. For example, Aluminium imports into India from ASEAN region have surged significantly. The reason has been an increase in imports especially from Malaysia. This is because the
tariff elimination schedule in India- ASEAN FTA is skewed heavily in favour of Malaysia.

Recommendations for a New Aluminium Policy

• Classifying aluminium as a core industry (coal, crude, oil, natural gas, refinery products, fertilizers, steel, cement and electricity) can give it a major boost.
• Reforms in coal and bauxite mining: must be ensured that once allotted, industry should not face administrative and legal hassles during the operation of coal and bauxite mines. All the mandatory clearances should be given beforehand.
• A single window clearance could also be put in place for faster clearances.
• Metal Scrap Recycling: A National Material Recycling Policy which is being drafted by NITI Ayog should be effectively implemented to achieve a target of 85% recycling rate by the year 2025 and enhance job creation opportunities.
• Energy policy for energy-intensive sectors: A separate energy policy needs to be framed for the energy intensive sectors like aluminium as they are being penalised by paying high carbon tax through various cesses and duties.
• Export policy for downstream industry: Downstream producers of Aluminium should to be encouraged for high end production and exports of value-added products of aluminium
• Trade policy and mega Free Trade Agreements: India trade policy and mega FTAs should be negotiated keeping in mind India’s experience w.r.t previous FTAs which haven’t yielded the desired result.
• Infrastructural and Database Issues: Aluminium being a continuous process industry will require priority access to infrastructure. Rake availability in railways should increase significantly.
• India needs a comprehensive geological database which can be mined for exploration of raw materials.
• An ecosystem for fly-ash should be created around these Aluminium production plants.