India's aluminium extrusion makers now run at barely 27-30% of their capacity, and their industry body says some are close to handing factory keys to the banks. They want the 7.5% customs duty on primary aluminium removed.
At a glance
- Extrusion output has dropped to 8-9 lakh tonnes a year, against installed capacity of about 30 lakh tonnes.
- Imports of aluminium products, at 15-16 lakh tonnes, are now roughly double what Indian extruders produce.
- The industry says about 30% of its workforce has been cut over the past year.
Background
Extrusion is how aluminium becomes useful shapes. Heated billets are pushed through a die to make window frames, rails, heat sinks and vehicle parts. Extruders buy primary aluminium from smelters such as Hindalco, Vedanta and NALCO, so their margins depend on the metal price. India charges a 7.5% basic customs duty on imported primary aluminium.
What happened
India's aluminium extrusion output has fallen to 8-9 lakh tonnes a year, down from about 12 lakh tonnes before the Iran war. Against installed capacity of roughly 30 lakh tonnes, that leaves plants running at just 27-30%.
Jitendra Chopra, president of the Aluminium Extrusion Manufacturers Association of India (ALEMAI), put it bluntly at an aluminium trade exhibition in Gandhinagar. "If the government does not act soon we are currently in a position to lock our factories and hand over the keys to the banks," he said. He added that the sector has shed about 30% of its manpower in the last year.
Why the squeeze is so severe
Chopra blamed supply-chain disruption, energy costs and expensive raw metal. The raw-metal problem is partly a tax problem. Primary aluminium carries a 7.5% customs duty plus a 10% surcharge on that duty, an effective 8.25%.
Indian smelters price their metal at import parity, so extruders pay that duty even when they buy locally. Finished aluminium goods, meanwhile, can enter under free trade agreements at lower rates. Imports have climbed to 15-16 lakh tonnes, about twice local output. "We are literally turning into a trading hub," Chopra said.
What it means for India
The cable, conductor and secondary aluminium associations say several input costs have risen 20-35% in three months. Gujarat alone has close to 100 extrusion units in Rajkot, Ahmedabad, Vadodara, Surat and Morbi, many of them small businesses supplying builders, automakers and power projects.
The industry wants the primary aluminium duty cut to zero and a review of inverted duty structures under trade deals. A cut would lower costs for downstream makers but would squeeze the pricing of India's own smelters. That tension makes it a harder call for New Delhi than it looks.
Our read
Outlook: neutral. This is a domestic margin squeeze on downstream fabricators rather than a shift in global aluminium supply or demand. A duty cut would lower Indian buyers' costs without moving LME prices.
What to watch
- Whether the finance ministry responds to the request to scrap the 7.5% basic customs duty on primary aluminium.
- Any review of inverted duty structures under India's free trade agreements for finished aluminium products.
- Monthly import figures for aluminium products, which show whether overseas supply keeps displacing domestic extrusions.
For information only, not investment advice.
Aluminium price in India
metalscost.com India reference price as of 2026-10-03.
Detailed analysis
Demand Drivers
Extrusions supply construction, cars, engineering, power and renewable-energy projects, but orders have thinned as imports take a bigger share of the market.
Supply Drivers
Imports of aluminium products have reached 15-16 lakh tonnes a year, roughly double India's 8-9 lakh tonnes of extrusion output.
Trade Tariffs
Primary aluminium carries a 7.5% basic customs duty plus a 10% surcharge on it, an effective 8.25% that extruders pay even on local metal.
What could lift prices
- Associations say several input costs have risen 20-35% in three months, raising the cost of making aluminium products in India.
- Energy and raw-metal costs remain high, which keeps a floor under Indian product prices.
What could weigh on prices
- Extruders running at 27-30% of capacity means weaker local demand for primary aluminium.
- Scrapping the 7.5% duty would lower the import-parity price of aluminium in India.
Country impact
| Country | Impact | Reason |
|---|---|---|
| India | High | Downstream makers face closures and job losses while imports run at about double domestic output. |
Industry impact
| Industry | Effect | Reason |
|---|---|---|
| Aluminium Extrusion | Negative | Plants run at 27-30% of capacity and have cut about 30% of their workforce in a year. |
| Aluminium Smelting & Refining | Neutral | Not hit today, but a duty cut would lower the import-parity price smelters can charge Indian buyers. |
| Wire and Cable Manufacturing | Negative | Cable and conductor makers report the same 20-35% jump in input costs. |
Who gains, who loses
- Importers of finished aluminium products: Imports now run at about twice domestic extrusion output, and free trade deals let some goods in at lower duty.
- Gujarat's extrusion units: Nearly 100 units in Rajkot, Ahmedabad, Vadodara, Surat and Morbi face fewer orders and tighter working capital.
Other ways this could play out
- If New Delhi removes the 7.5% duty, extruders' raw-metal costs fall and capacity use could recover.
- If duties stay and imports keep rising, more units could shut or turn into traders of imported goods.
Price risks
- A duty cut would lower Indian aluminium prices against the LME, a domestic move rather than a global one.
- Further rises in energy costs could push Indian product prices higher even with weak demand.
Technical view
Price is mixed relative to its 20-period and 50-period moving averages, showing no clear trend alignment.
Computed from metalscost.com's own stored price history.
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