India is poised to capitalize on the opportunity with its manufacturing prowess.

Rahul Sharma

CEO - Aluminium Business, Vedanta

Indian economy is going through rough seas since the past couple of years due to various reasons. Last two years have been like a rollercoaster ride, thanks to the Covid pandemic. Are we already seeing some green shoots? How optimistic are you about the USD 5 trillion growth target? Tell us about the overall view on the construction and infrastructure sectors.

India's economy in the next five years will be driven by manufacturing growth on the back of a strong economic recovery, led by rapid urbanization due to mass migration into cities. India's construction sector is expected to be the third largest in the world after China and US, with an overall value of USD 1 trillion by 2025. The Union Budget 2021-22 has given a major boost to the country's construction industry with a planned capital expenditure of USD 75.8 billion, which is an increase of 34.5% from last year's budget. With the government focusing on infrastructure to drive the economic growth, the construction industry is expected to rebound by 14.5% in 2021, as per leading analytics company reports. Apart from the planned federal capital expenditure, the central government has also committed USD 27.4 billion to states and autonomous bodies for capital expenditure in their respective areas. So, we can foresee a significant rise in construction activity in the near term. The central government's plan to build 100 Smart Cities and rejuvenate 500 others under AMRUT backed by a budget of Rs 98,000 crore is also expected to give a huge boost to this sector.

As India's largest producer of aluminium, Vedanta is uniquely positioned to cater to this demand. Vedanta Aluminium offers the largest portfolio of aluminium products for the downstream manufacturers/extruders like billets, slabs, ingots and rolled products. These are then extruded into structural components which are further fabricated for usage in a diverse range of applications like floating ceilings, windows, doors, stairs, wall panels, roof sheets, curtain walls and many more. In fact, our magnesium-silicon 6xxx alloys in billets are preferred among extruders as it is conducive to manufacturing the most intricate architectural shapes.

The government had announced the ambitious Rs 20 lakh crore package amid the peak of the pandemic last year. It's already been a year now; did you see any positive impact of its implementation and to what extent? In the meantime, the government has also announced Rs 100 trillion infra plan. How do you see these developments fuelling the growth engine? Which sectors (for e.g., power, aviation, railways, etc) are likely to drive the growth for the aluminium industry.

Construction in India will be dominated by urban development projects that will be government and public-funded projects, the key growth drivers among which shall be projects like Smart Cities, industrial corridors, railway stations, mega ports, and commercial spaces. According to Invest India, by 2025, the construction market in India is expected to grow at 7.1% each year. It currently contributes to 9% of the GDP and the overall outlook for the construction industry for the next five years looks positive, riding on government spending-led development projects. Projects such as National Infrastructure Plan, the Affordable Rental Housing Complex (ARHC) scheme, Sagarmala, UDAN-RCS, etc. will increase demand for critical metals such as aluminium.

Between 2021-26, the Indian government has planned an investment of USD 2.15 billion to electrify rural households. It also plans to double the share of installed electricity generation capacity of renewable energy to 40% by 2030, and targets 100% electrification of Indian Railways by 2023. All of these will boost the demand for electricity, and this will increase demand for aluminium, as aluminium is the best and most cost-effective enabler of long-distance electricity transmission.

With the meteoric growth of the electric vehicle industry, there will be a sharp increase in demand for aluminium products in the domestic market. The domestic aluminium industry will have to ramp up production capabilities very fast to meet that demand, alongside investing in R&D capabilities to ensure the development and production of alloys and aluminium products suitable for each use case or application in a rapid time frame, at competitive costs, as the market goes through explosive growth.

These projects stand to gain significant support from leading domestic producers like Vedanta Aluminium, in terms of high-quality value-added aluminium products specifically tailored for a wide array of applications in the construction sector.

India has embarked on the "Aatmanirbhar Bharat" mission with a clear emphasis to grow locally to become a global super-power. What are the challenges and opportunities that lie ahead before the India Inc.? Also, given the current geopolitical scenario (including the present dubiety with China), how do you see India emerging as a strong self-reliant economy. How do you think aluminium producers in India can deliver to the domestic demand of the country?

As economies world over are exploring a 'China+1' strategy for building resilient supply chains of critical goods & services, India is poised to capitalize on the opportunity with its manufacturing prowess. Manufacturing value-added products at par with global quality and sustainability standards will be crucial to establishing India's dominance in the global context. With our mega-scale Aluminium Smelters and Alumina Refinery we, at Vedanta Aluminium, are spearheading India's self-sufficiency in aluminium manufacturing. In fact, we have brought together R&D, Technical, Operations and Marketing expertise in a Centre of Excellence to invent the next big thing in aluminium.

Speaking about aluminium, the metal is critical to sectors of national importance like space exploration, electrification, transportation, aviation, power, defence, building & construction, and sustainable packaging. To truly unlock the potential of Indian Aluminium Industry and make India the manufacturing and value-addition hub of the world, there are four key levers that the government must act upon:

• First, promotion of aluminium usage in govt. projects should be a priority area. With the aim to make India a USD 5 trillion economy, the govt. is rolling out numerous high-impact projects, which have ample opportunities for aluminium.
• Second, as aluminium is a strategic metal critical for the country's self-reliance focus should be given to bolster the competitiveness of the domestic aluminium industry under Make in India. Aluminium has the potential for myriad uses in emerging applications, majority of which are yet to be explored by the domestic downstream sectors and the Indian Aluminium industry has the potential to lead the way globally, on this front.
• Third, the potential of aluminium industry should be acknowledged and recognized as core sector with a National Aluminium Policy that will encourage, protect, and boost the domestic aluminium industry. The Primary aluminium industry has a multiplier effect through its value chain, and plays a major role in nation development by eradicating poverty in the economically under-served regions where we are operating, by triggering local employment and bringing these remote areas into the socio-economic mainstream of the country. Such an industry has to be protected by the nation and supported through structured policies.

What are the challenges faced by the sector players? What are the measures that need to be taken to address the challenges? Also, how has the pandemic impacted the sector and how did the industry deal with it. How have you turned this pandemic into an opportunity instead of a challenge for your company?

The areas where the Indian Aluminium Industry seeks the government's intervention are:

• There is urgent need to implement adequate tariff and non-tariff barriers to curb dumping of  Aluminium in the country, as  India has currently overtaken China as the world's largest aluminium scrap importer and is  emerging as the global dump yard of scrap aluminium in the absence of any institutional mechanism like quality / BIS standards / guideline for scrap recycling/ usage and imports in the country. Sub-standard scrap imported into the country compromise the quality of the finished goods being manufactured in India, thus undermining the 'Make In India' cause.
• Discourage low-quality aluminium imports, by raising the customs duty on primary aluminium and scrap imports to 10% from 7.5% and 2.5% respectively at par with primary metal to proposed 10%, as in line with other non-ferrous metals like zinc, lead, nickel, tin etc.
• Correction of the anomaly of inverted duty structure on critical raw materials imported for the industry, which results in high cost of production. It also needs to reduce basic customs duty on critical raw materials for the aluminium industry value chain. Resolving this will effectively help the industry as the cost of production of aluminium metal in India has substantially increased (~25%-30% for the overall industry) in last 3-5 years due to rising cost of critical raw materials, inverted duty structure on import of raw materials, increase in various taxes/cess like Coal Cess, Electricity Duty, and logistics costs etc.
• The government also needs to safeguard the interests of the downstream industry by raising the duty rate of downstream aluminium products to 10% and 12.5% respectively from 7.5% and 10% respectively.
• As aluminium is a 100% recyclable metal, it would be prudent for India to facilitate a domestic eco-system for scrap recycling to encourage efficient utilization and recycling of indigenous scrap and promote circular economy. Further, there should be complete clarity with regard to which applications can use the recycled aluminium products through an established BIS Standard at par with global practices.

During the early phase of the nation-wide government mandated lockdown, we chalked out our key priorities - to ensure the well-being of our employees and, to keep our plants running 24x7x365 with minimal manpower and resources, as aluminium is a critical raw material for the wheels of the economy to keep turning.

The pandemic's unprecedented and rapidly evolving nature forced industries to change and adopt digital solutions quickly. At Vedanta Aluminium we took this as an opportunity to retool our business. Aluminium production being a continuous process industry, we accelerated the adoption of our digital and intelligent automation solutions to sustain production of this crucial and strategic raw material for the country. This ensured real-time decision making that in turn allowed us to respond to fluid market conditions, changing customer needs, disrupted supply chains and employee safety with agility and accuracy. Our tech and automation initiatives enabled us to unlock value across our entire value chain in ways that provided a positive step change in productivity as well as design and quality. So, despite constraint of manpower and resources, our aluminium plants have not powered down even for an hour.

What are the technological advances achieved in this segment?

Vedanta Aluminium has always been a digital-first and pro-technology company. We have led innovation from the front in the Indian Aluminium industry, COVID has only accelerated the process for us. Some of our key innovations, which aided in business continuity are:

• Vedanta's smelter at Jharsuguda is India's first, and the world's third smelter to deploy Digital Smelter Solution using digital twin technology, which allows remote monitoring and control of potline operations, enhances energy efficiency, and arrests wastage of material.
• We have deployed first-in-the-industry Deep Learning algorithms and other cutting-edge technologies for Advanced Asset Performance Management at our power plants
• Manufacturing Execution System (MES) implemented across our plants ensured visibility of all critical plant operations and allowed for decision making remotely through mobile applications, thus ensuring seamless sustainability of operations while employees can maintain social distancing and yet fulfil their activities on the plant floor.
• We have developed Digital Logistics Control Towers for coal, alumina and bauxite which use classical Machine Learning and OR (Operations Research) based mathematical modelling to reduce commodity costs, pilferages, and process ineffectiveness from mines through plants to ports.
• The complex and diverse procurement of commodities, materials and services are fully automated unlocking substantial cost reduction, faster O2C cycle and business realizations.
• Our plants also use vision analytics and contextual analytics in multiple plant sites like identification of hot spots in ICTs (information and communication technology) for improving asset reliability.

Can you also share your outlook for your company by 2025?

Our immediate aim is to invest in expanding our Alumina Refinery to provide feedstock to our Aluminium Smelters. In parallel, we are looking at expanding our smelting capacity and value-added product offerings in line with increasing market demand. Our vision is to become a fully integrated aluminium player with operations across refining, smelting and power with secured fuel sources. We are also working towards operationalizing our assets to 100% capacity. Our customers have always been at the center of our growth strategy and to cater to their sophisticated and evolving needs, we plan to enhance our value-added product portfolio as well. With upcoming expansion plans across our assets and venturing into new product lines, Vedanta Aluminium is poised to spearhead India's self-sufficiency sustainably, by spurring emerging applications of aluminium, the green 'metal of the future'.

Hits: 330