Backed by abundant and good quality bauxite reserves and cheap labour costs, Indian aluminum producers have emerged among the lowest cost producers in the world. India is home to the sixth largest bauxite deposit in the world which makes it the world's 5th largest aluminium producer. Aluminum industry in India registered a phenomenal growth during the past few years on the back of robust growth in the economy. However, the sector witnessed some hiccups on account of the global credit crisis, which led to a substantial fall in demand and prices of the metal. Nevertheless, the demand in domestic markets is expected to remain robust on account of government's emphasis on infrastructure and power. Also the fact that per capita consumption of aluminium in India is way below both developing as well as developed economies creates a platform for significant growth over the long term.
Budget Measures
Plan allocation to power sector doubled from Rs 22 bn in FY10 to Rs 51 bn in FY11.
Process of drawing or redrawing of aluminium tubes and pipes declared as amounting to 'manufacture' for the levy of Central Excise.
Surcharge on domestic companies reduced to 7.5% from 10%
Increase in the rate of Minimum Alternate Tax from 15% to 18% of book profits
Budget Impact
Increased spending on power sector would result in higher consumption of aluminium.
Increase in tax slabs for citizens would result in higher disposable income that will likely trigger increased demand for consumer durables, white goods etc, thus eventually boosting the demand for aluminium.
Backed by abundant and good quality bauxite reserves and cheap labour costs, Indian aluminum producers have emerged among the lowest cost producers in the world. India is home to the sixth largest bauxite deposit in the world which makes it the world's 5th largest aluminium producer. Aluminum industry in India registered a phenomenal growth during the past few years on the back of robust growth in the economy. However, the sector witnessed some hiccups on account of the global credit crisis, which led to a substantial fall in demand and prices of the metal. Nevertheless, the demand in domestic markets is expected to remain robust on account of government's emphasis on infrastructure and power. Also the fact that per capita consumption of aluminium in India is way below both developing as well as developed economies creates a platform for significant growth over the long term.