Indian Aluminum MSMEs Face Cost Disadvantage, Struggle Despite Supporting Strategic Sectors

Published: Aug 4, 2026 14:00

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India, though the world’s second-largest primary aluminum producer with an annual capacity exceeding 4.16 million mt, sees its roughly 3,500 downstream micro, small, and medium aluminum processing enterprises (MSMEs) trapped in a structural cost disadvantage caused by the import parity pricing mechanism for primary aluminum. This mechanism anchors domestic primary aluminum prices to an international benchmark plus tariffs, forcing downstream enterprises to pay import-equivalent prices even when purchasing locally produced metal. Yet these MSMEs support about 90% of employment in the aluminum value chain and supply critical materials to strategic sectors such as power transmission and transformation, renewable energy, railways, and EVs, while operating at margins of only about 5% and an operating rate of about 65%—a stark contrast to the nearly 98% operating rate and about 10% margins in the primary aluminum sector.

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