Aluminium Sector Is Not Yet Ready for Green Transition: NALCO CMD
India’s aluminium industry is facing growing pressure to align with global decarbonisation goals, but it is not yet ready for a full-scale green transition, according to Brijendra Pratap Singh, Chairman and Managing Director of National Aluminium Company Limited (NALCO).
Speaking in an interview, Singh said the sector is still grappling with structural challenges—high energy dependence, cost constraints, and limited access to green power—that make an immediate shift to low-carbon or “green aluminium” difficult, especially in comparison to European producers.
His remarks come against the backdrop of the Carbon Border Adjustment Mechanism (CBAM) introduced by the European Union, which will impose carbon-linked levies on imports of emission-intensive products such as aluminium, steel, and cement.
Why Green Aluminium Is a Challenge for India
Green aluminium refers to aluminium produced using low-carbon or renewable energy sources, significantly reducing greenhouse gas emissions. In theory, India has an advantage due to its growing renewable capacity. In practice, however, aluminium production remains extremely energy-intensive, with electricity costs accounting for nearly 40 per cent of production expenses.
Singh explained that Indian aluminium producers still rely heavily on coal-based captive power plants. While renewable integration is improving, the scale and reliability required for smelters operating round the clock are not yet in place.
He stressed that moving too quickly toward green aluminium without addressing cost and infrastructure realities could make domestic producers uncompetitive, both in local and export markets.
CBAM and Its Limited Immediate Impact on NALCO
The EU’s CBAM has triggered anxiety across metal exporters globally, but Singh clarified that NALCO has not been directly impacted so far. The reason is simple: NALCO does not export aluminium directly to the United States or Europe in significant quantities.
This has insulated the PSU from immediate tariff or carbon levy shocks. However, Singh acknowledged that indirect impacts are inevitable as global aluminium prices, supply chains, and customer preferences evolve in response to CBAM.
Over time, even domestic-focused producers may feel pressure as buyers increasingly demand low-carbon materials.
Domestic Demand Remains Strong
Despite global headwinds, Singh struck an optimistic note on domestic demand. He said aluminium consumption in India continues to grow steadily, driven primarily by infrastructure expansion and the power sector.
Sectors such as transmission lines, renewable energy projects, railways, urban infrastructure, and housing are major aluminium consumers. As India invests heavily in roads, ports, airports, and power networks, aluminium demand is expected to rise in parallel.
According to Singh, this domestic momentum provides a crucial buffer for Indian producers at a time when export markets face uncertainty.
Expectations From the Union Budget
When asked about expectations from the upcoming Union Budget, Singh highlighted infrastructure and power as the two most critical areas for the aluminium sector.
He noted that aluminium demand is closely linked to capital expenditure in these sectors. Increased public spending on infrastructure automatically translates into higher aluminium consumption, while growth in the power sector boosts both direct demand and overall industrial activity.
Singh said sustained and predictable government funding for infrastructure projects would provide long-term visibility for aluminium producers, allowing them to plan capacity expansion and efficiency improvements.
Power Costs and Competitiveness
One of the biggest hurdles to green aluminium in India remains power cost and availability. While renewable energy prices have fallen sharply, integrating renewables into continuous industrial processes is complex.
Aluminium smelters require stable, uninterrupted power. Storage solutions and grid upgrades needed to support renewable-heavy operations are still evolving. Until these systems mature, coal-based power remains the backbone of aluminium production.
Singh indicated that policy support in areas such as renewable integration, storage technologies, and transmission infrastructure would be essential before expecting a meaningful green transition.
India vs Europe: A Structural Gap
European aluminium producers are under intense pressure to decarbonise, but they also benefit from higher product pricing, state support, and access to advanced green technologies. Indian producers operate in a far more price-sensitive market.
Singh cautioned against directly comparing India’s aluminium sector with Europe’s. Per capita aluminium consumption in India remains significantly lower, and affordability plays a far larger role in shaping demand.
Any abrupt increase in production costs due to forced green transition could slow down aluminium adoption in key sectors such as housing and power, undermining broader economic goals.
Long-Term Path to Green Aluminium
While Singh was clear that the sector is not ready today, he did not dismiss green aluminium as a long-term objective. Instead, he framed it as a gradual transition, requiring coordinated efforts from industry, government, and technology providers.
Key enablers would include greater availability of low-cost renewable power, improvements in energy storage, financial incentives for low-carbon production, and phased implementation of carbon regulations that allow producers time to adapt.
He suggested that policy certainty, rather than abrupt mandates, would be critical in encouraging investment in green technologies.
Strategic Importance of Aluminium for India
Aluminium is not just another industrial metal for India. It is strategically important for sectors ranging from defence and aerospace to renewable energy and electric mobility.
Singh emphasised that ensuring a strong, competitive domestic aluminium industry should be a national priority. Any transition toward greener production must safeguard supply security, employment, and affordability.
He also noted that as India’s manufacturing ambitions grow, aluminium will play a key role in reducing import dependence and supporting value-added exports.
A Sector at a Crossroads
The aluminium industry in India stands at a crossroads. Global climate regulations like CBAM are reshaping trade dynamics, while domestic growth continues to fuel demand. Balancing these forces will define the sector’s trajectory over the next decade.
Singh’s message was clear: green aluminium is the future, but pushing the industry before it is structurally prepared could do more harm than good. For now, the focus remains on growth, competitiveness, and building the foundations that will eventually make a green transition viable.
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