India’s aluminium extrusion output falls to close to 900kt as capacity utilisation slumps near 30%

India’s aluminium extrusion industry is facing mounting pressure as production has dropped while manufacturers operate at only about 30 per cent of installed capacity, prompting concerns over the viability of several factories. The Aluminium Extrusion Manufacturers Association of India (ALEMAI) has also sought the removal of the 7.5 per cent basic customs duty on primary aluminium which, together with the applicable surcharge, results in an effective duty of about 8.25 per cent, arguing that the levy is adding to raw-material costs for domestic downstream manufacturers.

According to the latest industry figures, India’s aluminium extrusion production has declined to around 800-900 thousand tonnes, from approximately 1.2 million tonnes earlier. This compares with an installed extrusion capacity of nearly 3 million tonnes. The contraction has raised concerns about further factory closures if operating conditions do not improve.

Higher input costs can squeeze already-thin processing margins and make it harder for domestic producers to compete with imported finished products.

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Aluminium imports add to pressure on domestic manufacturers

The latest industry estimates indicate that imports of aluminium extruded products have risen to around 1.5-1.6 million tonnes, significantly above domestic production of 800-900 thousand tonnes.

The widening gap between domestic output and imports has become a key concern for India’s downstream aluminium industry. With a substantial portion of the country’s extrusion capacity remaining underutilised, manufacturers are seeking policy measures that they say could improve their cost competitiveness.

ALEMAI has been pushing for changes to the duty structure, particularly the removal of the basic customs duty on primary aluminium. The industry body has argued that domestic extrusion manufacturers are effectively paying more for their principal raw material while competing with imported finished products.

Global aluminium prices intensify cost pressure

The cost challenge has become more pronounced amid the rise in global aluminium prices. Recent industry coverage puts aluminium prices at more than USD 3,200 per tonne, compared with around USD 2,600 per tonne previously.

How does it matter for downstream processors? It creates a difficult operating environment where aluminium prices directly influence production costs, while manufacturers still have to compete for orders in a market where imported products can put pressure on selling prices.

The issue extends beyond extrusion manufacturers. Recent analysis of India’s downstream aluminium sector noted that aluminium can account for as much as 80 per cent of production costs for some downstream manufacturers, while margins can be considerably thinner than those of primary aluminium producers.

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Gujarat extrusion units have faced additional disruptions

Earlier this year, aluminium extrusion manufacturers in Gujarat reported severe production constraints following disruptions to industrial gas supplies amid geopolitical tensions in West Asia. Gujarat has around 100 extrusion units with a combined capacity of about 50,000 tonnes per month, but production had fallen to approximately 15,000 tonnes per month, according to industry representatives.

ALEMAI President Jitendra Chopra said at the time, “The state has a total installed capacity of 50,000 tonnes per month across around 100 units. Due to the geopolitical crisis and disrupted industrial gas supply, current production is only about 15,000 tonnes.”

The disruption reportedly forced several units to stop manufacturing, while others operated only a few days a week.

The severity of the energy problem was also highlighted by Reuters in April, when Chopra said several Gujarat aluminium extrusion plants had shut “four to five days after the war started due to unavailability of gas.”

Also read: India aluminium extrusion sector targets 10% growth with ₹750b revenue amid working capital pressure