Complete electrification target by FY2018 may spur a rally in Indian aluminium industry

On Monday June 12, Union Power Minister Piyush Goyal announced that by the end of 2017, the country would be fully electrified and no village would be left without a power connection.

“We are in fact now in advance stage of electrifying all homes,” he declared.

Addressing the media on completion of three years of the present government, Goyal said the power sector has registered a 4.2 times growth through intensive electrification of villages from 14,956 villages in 2013-14 to 63,330 in 2016-17.

It is to be noted that India’s metal companies were almost written off by investors in 2015, amid the worst price slump in six years. The Federal budget proposals in 2016, to boost infrastructure spending by 15% and take electricity to every household by 2018, spurred a rally in domestic metal producers on optimism that it would drive domestic consumption. By the end of the fourth quarter of FY 2017, the three aluminium majors in India, Nalco, Hindalco and Vedanta Ltd, registered substantial growth in production and domestic sales volume.

The minister emphasised the speed with which the news government is working with strict target, under ‘the electricity for all’ object of the Modi government. He also said the imports of coal had been reduced in 2017 to save foreign exchange of INR 25,900 crore.

“We are a country which is power surplus and coal surplus for the first time since Independence. The abundance of power – hydro, solar, wind and biomass – is sure to give an unprecedented fillip to the overall socio-economic growth of the country,” Goyal added.

He pointed out the fact that India has progressed from at 99^th position in 2015 to 26^th in 2017 in the World Bank rating of “ease of getting electricity index”.

Talking about renewable e energy target, he said Modi government had taken upon itself world’s largest renewable energy expansion programme of 175 GW by 2022 including 100 GW of solar energy.

A report titled “Indian Aluminium Industry: Geared for growth,” by Crisil, a global ratings and research company stated in 2016 that aluminium consumption in India would grow from 3.3 million tonne in 2015-16 to 5.3 tonne in 2020-21 due to a host of government initiatives like, Make in India, Smart Cities, Housing for all, rural electrification, and freight corridors.

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Aluminium industry majors have strongly opined in a number of times that there are two things that will boost the aluminium market: one is India’s focus on electrification and infrastructure and second is the expansion of downstream capacities and capabilities. Overall, the investment in power & infrastructure sector and expansion of electrification would surely drive the growth for domestic aluminium industry in FY 2018.