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Budget 2011: 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 has registered a phenomenal growth on the back of robust growth in the economy. The demand in domestic markets is expected to be 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, it creates a platform for significant growth over the long term.\

 Budget Expectations
  • Rationalization of excise and custom duty structures

  • Personal income tax relief as the same would boost aluminium consumption.

  • Increase in limit of income tax deduction for the auto and housing loans. This measure is also likely to boost aluminium consumption.

  • Increased allocation to infrastructure development schemes like Bharat Nirman, Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY), Jawaharlal Nehru National Urban Renewal Mission (JNNURM), Accelerated Power Development & Reform Programme (APDRP), etc.

     Budget Measures
  • Rs 2.1 trillion earmarked for infrastructure development.

  • Planned allocation of Rs 580 bn to Bharat Nirman.

  • Surcharge on domestic companies reduced to 5% from 7.5%.

  • Rate of minimum alternate tax (MAT) on book profits has been increased from 18% to 18.5%.

  • Exemption limit for general category of individual taxpayers increased from Rs 1,60,000 to Rs 1,80,000.

     Budget Impact
  • Increased spending on the infrastructure sector would result in higher consumption of aluminium, benefiting companies like NALCO and HINDALCO

  • 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 supporting the demand for aluminium.

    Budget Impact: Aluminium Sector Analysis for 2010 
    Latest: Performance Of Aluminium Stocks | Aluminium Sector Report

  • Complete coverage – Budget 2011

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