A striking figure has emerged from India's aluminium downstream sector: the country's aluminium extrusion industry, with an installed capacity of approximately 3 million tonnes per year, is producing only around 800,000–900,000 tonnes — a capacity utilisation rate of roughly 30%. At the same time, India is importing 1.5–1.6 million tonnes of aluminium extrusions, meaning that imports significantly exceed domestic production. This is an unusual industrial configuration — a country simultaneously running its own capacity at a fraction of its potential while importing more than it produces domestically — and understanding how it came about, and what it means for India's aluminium value chain, is relevant context for anyone in the aluminium supply chain, including the casting sector.
How the Duty Paradox Created the Problem
The proximate cause of India's extrusion utilisation crisis is a structural anomaly in the country's import duty architecture — described in industry commentary as the "aluminium duty paradox." India applies an 8.25% basic customs duty on primary aluminium (the smelter-produced metal that is the feedstock for extrusion), but imports of finished aluminium extrusions from countries with which India has Free Trade Agreements — notably ASEAN nations including Malaysia, Thailand, and Vietnam — enter at zero or very low duty. This creates a situation where an Indian extruder pays 8.25% duty on its raw material but competes against importers who bring in finished product duty-free. The effective cost disadvantage for domestic extruders is substantial: they are structurally undercut on input costs by competitors who access both cheaper primary metal (often from government-subsidised smelters in China) and duty-free market access. The result is the paradox of idle domestic capacity alongside surging imports.
The China Connection
Behind the ASEAN import surge is a China dimension that trade analysts have documented carefully. A significant proportion of the extrusions imported into India from ASEAN nations are processed from Chinese primary aluminium or are Chinese-origin products routed through ASEAN to benefit from FTA duty rates — a trade practice often described as trans-shipment or FTA circumvention. China's aluminium extrusion capacity is the largest in the world, heavily subsidised at the smelting and processing stages, and producing at costs that genuinely undercut most other global producers. Indian industry associations have lobbied for anti-circumvention investigations and for the imposition of safeguard duties on extrusion imports, with limited success to date. The policy response to this trade pattern will significantly influence whether India's extrusion sector recovers its utilisation or continues to cede domestic market share to imports.
Why the Casting Sector Should Pay Attention
The extrusion utilisation crisis may appear distant from the concerns of a gravity die casting foundry in Kolhapur, but the underlying dynamics are connected in ways that matter. First, aluminium extrusion scrap — the off-cuts and process scrap from extrusion operations — is one of the primary feedstocks for India's secondary aluminium sector, which in turn produces the ADC12 and other casting alloys that foundries consume. When extrusion output falls, the domestic generation of extrusion scrap falls with it, tightening the supply of clean, consistent scrap that secondary alloy producers need and contributing to the scrap supply bottleneck that has been driving secondary alloy prices. Second, the duty paradox that is damaging the extrusion sector reflects a broader policy environment in which downstream aluminium processing is structurally disadvantaged — a concern that the casting sector, which also processes primary and secondary aluminium, should track as part of its policy engagement through industry associations like AIFI and MRAI.
The Investment Paradox
Perhaps the most concerning aspect of India's extrusion utilisation crisis is that it has occurred against a backdrop of continued capacity investment. Several Indian extrusion companies have added press capacity over the past five years — responding to the long-term growth narrative for aluminium in construction, automotive, and infrastructure — even as existing capacity was increasingly underutilised. The result is a sector with more capacity than it can run, importing more than it produces, and generating losses at the operating level despite the secular tailwind of growing aluminium demand. Resolving this paradox requires policy action — specifically, a rebalancing of the duty structure to remove the input cost disadvantage that domestic processors face — and the industry's sustained advocacy on this issue is an important battle for India's entire aluminium value chain.
Implications for Long-Term Aluminium Supply in India
The extrusion crisis is a symptom of a broader challenge in India's aluminium value chain: the country has invested substantially in upstream smelting capacity (Hindalco, Vedanta) and is investing in downstream casting capability, but the midstream processing layer — extrusion, rolling, foil — is struggling to compete with imports. If this pattern continues, India risks developing a bifurcated aluminium industry: world-class in primary production and in some downstream applications, hollowed out in the processing middle. For the casting sector, which occupies a downstream position in the value chain, the lesson is clear: policy engagement on import duty structure and FTA terms is not an abstract concern but a direct determinant of competitive conditions in the market.