By Vivek Pattanayak* in Bhubaneswar, September 26, 2016 : Recently, Mr. Anil Aggarwal of Vedanta made a significant statement which should not escape the mind of policy makers, planners and strategic thinkers. He observed that while India is consuming only 2 million tons of aluminium per annum now, it is going to increase to 20 million tons within a foreseeable future. At present India is far behind China in terms of per capita consumption of this metal although quarter century ago both the countries were almost at the same level.

How could China make a big jump? From the time China opened up its economy in the late eighties, there was massive investment in construction activities which included railway expansion, housing, road transport, maritime port, warehousing facilities and airports. All these activities created demand for aluminum, and China not only invested in establishment of aluminium smelters but it also imported both alumina and the metal.

If the forecast of IMF chief has to be taken seriously, then India would continue to lead the global economic growth in the years to come, with China having already decelerated. As it is, India has shown a growth rate of 7.4% during the year 2015-16, and expected to grow at 7.6% in the fiscal year of 2016-17 as the Budgetary forecast would indicate. For India to grow at that rate is no miracle as in the past it has grown even at a higher rate. Although stagnation in global economy affected India’s growth in the recent past, one should not ignore the fact that the country’s economic activities were also subdued due to political impasse which gripped the nation before the last election.

Now that the country has a stable government at the centre with no coalition compulsion, and in the last two years the Prime Minister has taken demonstrative initiative to launch programmes like Make in India, Start Up India and Stand Up India, and Digital India, further, he has taken host of measures to bring in reforms, liberalize the economy, and create an environment for ease of doing business, and again, he has been personally moving from country to country to encourage industrialists to come to India to invest in the country, generally the climate of investment has changed.

The middle class in India is growing in a spectacular almost unstoppable way creating demand for housing, two-wheelers, cars, SUVs, leisure travel and fast food etc. as a result the construction activities, transport industry, and canning industry would have growth opportunities. In addition, aviation and railway industry would grow with rising demand for travel by the additional number to the middle class. India’s defence industry whether it is in military aviation or naval expansion would need aluminum metal either in pure or alloy form and so would India’s ambitious space programme.

Further, silicon and aluminum alloy, the metal of the future, which is lighter than steel but as strong as steel, if not stronger, yet machinable, castable and forgeable would perhaps replace steel in the long term. All these factors will have impact on the aluminium industry. Demand for aluminium metal would inevitably increase.

Demographic dividend of India, an asset to the domestic economy, thanks to failure of family planning programme of the seventies of the last century, will provide the necessary work force which would propel the economy in the coming years.

In the light of this, the government can take positive initiative to encourage the public sector behemoth, National Aluminium Company (NALCO), to augment aluminium metal production in a phased manner by increasing domestic capacity, acquiring capacity outside the country, and also encourage private sector to establish greenfield projects and expand capacity. In Odisha, alone there are so many entrepreneurs who have signed MOU to set-up alumina and aluminium plants and waiting for clearances.

In this context, signing of MOU with Iran by NALCO is laudable since the energy cost in the oil rich Iran will be low making the cost of production of metal cheap. Iran’s coming out of US sanction is a boon at the present situation for aluminium production. No wonder China is trying to establish three-million-ton aluminium plant there.

Similarly, Indonesia which has oil reserve can be another place where NALCO can invest in establishing smelter. Few years ago there was some talk of starting the project there but for some reason the matter went into cold storage. Further, establishing a project in Quebec in Canada can be explored where NALCO can take advantage of cheap hydro power to produce low cost metal. Its exported alumina can be converted to the metal. The present government of Canada under Justin Trudeau is friendly towards India and the government of Quebec is desperately looking for new industry to create employment.

Acquisition of factories abroad is unorthodox and out of box for a public sector undertaking like NALCO. Aluminium is a strategic metal and its consumption would increase as it has been clearly stated earlier. Private sector may not be able to spring into action to invest and expand due to regulatory hurdles, civil society activism and lurking fear.

The country at the same time should not be constrained by shortage of this strategic metal which is vital for growth at the critical stage. Garnering of strategic resources at different locations in the world from Asia to Africa and Middle East, and now in Latin America has been the policy of rising and ambitious China. India, which aims at becoming twenty trillion-dollar economy within a decade must learn from China and start garnering vital resources.

(*Former member of the Indian Administrative Service and also International Civil Service)