"All investment projects are getting delayed. Government spending is not there and the private sector is not coming into the power sector," said JK Nag, manager, corporate planning at Indian Aluminium Co Ltd (Indal).

Indal is a leading producer of aluminium rolled products and foils.

"The government must make less promises and do more work. In terms of reality, they should pump in money," Nag said.

Sluggish offtake from the transport and electrical sector had clouded hopes of any near-term recovery in the aluminium sector, analysts said.

The slowdown in the domestic industry has particularly affected demand for aluminium and copper in the non-ferrous sector, traders said.

India's industrial output fell to 3.6 per cent in the seven months of 1998/99 (April-March) compared with 6.2 per cent in the year-agoperiod.

"Aluminium is particularly affected because of the lack of infrastructure spending," Hindalco Industries Ltd, India's biggest private producer, said.

"In the aluminium consuming sectors such as electrical, transportation and building construction, this is most pronounced," the company said in a statement.

Other sectors such as consumer durables and packaging had also been affected, it said.

Hindalco on Wednesday said its metal production rose 22 per cent to 180,320 tonnes in the nine-months to December 31, 1998 from 147,797 tonnes in the year-ago period.

"Industry has been adversely affected by large scale imports of aluminum scrap resulting from low prices and a duty differential," the firm said.

India is self sufficient only in aluminum among non-ferrous metals.

Industry players have urged the government to double the basic import duty on scrap to 20 per cent in the 1998/99 federal budget to be announced on February 27.

This will bring it in line with the tariff on virginmetal.

The government in July cut basic customs duty on aluminium scrap to 10 per cent from 20 per cent.

"Our request to the government is that scrap duty should be raised as there are a lot of people who are importing virgin metal in the form of scrap, thus availing of the lower duty," an official from state-run National Aluminium Co said.

However, Indal's Nag said the government needed to lower import duties in line with international trends.

"It is necessary we get to a point where we talk in global terms," he said.