India’s aluminium extrusion manufacturers are reporting deep financial stress with capacity utilization dropping to 30%. The sector is urging the government to review import duties, as surging raw material costs and high import volumes threaten the survival of local factories. This slump impacts supply chains in the automobile, construction, and power industries.
India’s aluminium extrusion industry is currently facing a severe downturn, with production volumes falling significantly to between 8 and 9 lakh tonnes. This is a sharp drop from the 12 lakh tonnes seen before recent regional conflicts in the Middle East. With the total installed capacity sitting at 30 lakh tonnes, the current utilization rate of just 27% to 30% means that most factory machines are sitting idle for the majority of the time. This idle capacity makes it extremely difficult for manufacturers to cover fixed costs, leading to rising debt and reports of impending asset surrender to creditors.
The primary concern for these manufacturers is the current duty structure on raw materials. The 7.5% basic customs duty, when added to a 10% social welfare surcharge, results in an effective tax burden of 8.25% on primary aluminium. Domestic players argue that this policy inadvertently hurts local manufacturing. Because the cost of raw material is kept artificially high for local factories, they find it difficult to compete with finished aluminium goods being imported from abroad. Imports have now reached 16 lakh tonnes, which is nearly double what domestic factories are producing. This gap suggests that India is increasingly functioning as a trading hub for foreign goods rather than a manufacturing base, creating significant pressure on the survival of local industrial units.
Beyond the duty structure, the sector is also fighting external inflationary pressures. Prices on the London Metal Exchange have surged from around $2,200 per tonne to over $3,700. Simultaneously, secondary costs related to production inputs have risen by 20% to 35% in the last quarter alone. For smaller manufacturers, who often operate on thin margins, these cost spikes are difficult to pass on to customers, especially with weak demand.
The implications of this slowdown extend to several key sectors. Industries such as automobile manufacturing, construction, and power transmission rely heavily on extruded aluminium components. If domestic production continues to shrink, these downstream industries may face supply chain uncertainty, increased reliance on imports, or higher procurement costs. The job losses reported—estimated at 30% of the sector's workforce over the past year—highlight the human and economic toll of this stagnation. Manufacturers in major hubs like Rajkot, Ahmedabad, and Vadodara are currently struggling to secure enough working capital to keep operations running and fulfill existing orders. The key monitorable for investors and stakeholders will be whether the government adjusts the duty structure to balance the needs of primary producers with the survival of downstream extruders.