The major entry barriers for establishing an integrated aluminum facility include bauxite mining, alumina refining, and smelting of alumina into aluminum. The latter necessitates a regular and consistent supply of power. For this purpose, a captive power plant is essential. The other entry barriers include huge capital costs and economies of scale. It is estimated that approximately Rs.80 billion is required to establish a 0.25 million tpa integrated facility. Another disadvantage faced by the industry is that it is exposed to price fluctuations. The downstream aluminum producers, which include re-rollers or scrap recycling units, have to pay a high import duty based on the content of primary aluminum. Another serious threat faced by the industry is the dumping of cheap metal by Russia, China and the UAE in India. Substitute threats faced by aluminum are from steel (in the automobile sector), plastics and HDPE (in the packaging sector), and copper (in the electrical sector). The relatively high cost of aluminum when compared to steel is another factor that could be detrimental to its growth. Global Competitiveness Indian aluminum industry is globally competitive. Two of the industry players viz. Hindalco and Nalco have the distinction of being the lowest cost manufacturer of aluminum in the world. Indian aluminum sector is internationally competitive on account of following factors like :
|
||||||||||