India’s aluminium extrusion industry expects demand to grow at around 10% annually over the next five years, driven by data centres, renewable energy, construction, electric vehicles, semiconductor plants and packaging, but manufacturers are struggling to finance operations amid a sharp rise in raw-material and energy costs.

Jitendra Chopra, president of the Aluminium Extrusion Manufacturers Association of India (ALEMAI), said the downstream industry, comprising around 400 MSME and medium-sized units, generates annual revenue of about Rs. 75,000 crore and currently provides around one million jobs. He said the sector could generate one and a half times more employment and investment if manufacturers are able to utilise their existing capacity and compete more effectively with imports.

“There is a demand with the development of India,” Chopra said, pointing towards growing numbers of data centres, solar and renewable-energy projects, multi-storey construction, transmission and electrification, EVs and semiconductor manufacturing. The industry, Chopra said, is expected to grow at a compound annual rate of 10% over the next five years.

The immediate constraint, however, is finance. Chopra said post-Hormuz crisis, raw-material prices have risen by around 30%–40%, while energy costs have increased by about 30%, leaving manufacturers with a significant working-capital requirement. Although the government had provided temporary support through the Emergency Credit Line Guarantee Scheme (ECLGS), including additional working capital, he said the industry continues to face cash-flow pressure.

According to Chopra, manufacturers face 2% TDS and 2% TCS deductions, which effectively lock up funds that businesses otherwise need for working capital. “We are paying interest to the bank, while the government is taking the money from us without interest,” he said, adding that the money can remain tied up for two to three months.

The financing pressure comes as manufacturers also struggle to pass on higher costs. Chopra said finished-product prices have increased, but not in proportion to the rise in input costs because of competition from imported value-added aluminium products.

The industry has an installed extrusion capacity of about 3 million tonnes a year, but Chopra said manufacturers do not have sufficient orders to utilise it fully. Earlier this year, ALEMAI had said production had fallen sharply amid the West Asia crisis and supply-chain disruptions. According to him, the production has fallen to 0.8 million tonnes a year.

Chopra said the industry’s longer-term problem is cost competitiveness. Domestic manufacturers, he said, effectively pay import-parity prices for aluminium ingots and billets, on which there is a 7.5% import duty. At the same time, finished products from FTA partner countries can enter India at concessional or zero duty.

The association has been seeking zero duty on ingots and billets and a higher duty on finished value-added aluminium products with the objective was to make domestic manufacturing more competitive and enable Indian companies to capture the expected growth in aluminium demand.