India is considered the fifth largest producer of aluminium in the world, following Australia, Guinea, Brazil and Jamaica. It has huge reserves of high-grade bauxite. It is estimated at about 3037 million tonnes for all categories of bauxite (proved, probable and possible). With the present level of consumption of aluminum (assuming 1.2 million tonnes of aluminium production with 7 million tonnes of bauxite), the identified reserves would have an estimated life of over 350 years. India's reserves are estimated to be 7.5 per cent of the total deposits and installed capacity is about 3 per cent of the world. In terms of demand and supply, the situation is not only self-sufficient, but it also has export potential on a competitive basis. India's annual export of aluminium is about 82,000 tonnes. The global consumption of aluminium is estimated to grow at 3 to 4per cent from 2000 to 2007. This provides a market signal for potential growth of Indian aluminium industry and export of both alumina and aluminium.

About a decade back, the primary Indian aluminium producers were BALCO, NALCO, INDAL, HINDALCO and MALCO. Of the five, two (BALCO and NALCO) were in the public sector while the other three were in the private sector. MALCO was 'sick' and on the path to closure. Public sector enterprises then enjoyed  preferential treatment in the form of explicit protectionism. Therefore, the cost of production of BALCO was benchmarking the selling prices in the domestic market. With the inception of NALCO in 1981, the production pattern shifted in favour of the public sector. This happened as BALCO with a capacity of 100,000 tonnes per annum and NALCO with an installed capacity 230000 TPA, boosted the output share of primary aluminium from the public sector. The domestic market was dominated primarily by the public sector though prior to this, HINDALCO and INDAL were the main players.

The shift from the private to the public sector and again from the public sector back to the private sector has been a notable change in Indian industry. Presently, of the 714,000 TPA installed capacity in the country for production of primary aluminium, the public sector commands 330,000 TPA (49.21 per cent) and the private sector accounts for 384,000 TPA (53.78per cent.) This represents a gradual but deterministic shift in the production pattern. With BALCO'S disinvestments on the cards, the share of the private sector will increase at the commensurate rate (i.e. expected to be 67.8 per cent in private sector). Earlier, HINDALCO and BALCO were the trendsetters for prices in the country. Earlier, domestic sale of aluminium had  administrative prices along with distribution controls.

With liberalisation, the prime strategies are the joint venture investments, technology acquisition/offers, international marketing tie-ups, buy back arrangements and subcontracting, technical, managerial and marketing expertise. As a part of reform, several policy changes have been enunciated to ensure hassle free entry of private investment. Similarly, as part of moving towards privatisation, the government is withdrawing its presence from as many areas as possible, through closure and sale of equity or disinvestments.

Prospects for the aluminium industry seem to be bright as aluminium is being used increasingly in energy efficient vehicles. For instance, the space shuttle, the HUMMER vehicle, and the Ferrari 360 Modena all are made of high performance aluminium. Material automakers are increasingly choosing to improve fuel economy, reduce emission and enhance vehicle performance.

Aluminum is likely to surpass plastic in the coming years as it will be used more in light vehicles. The recent announcement from the Ford Motor Company to improve fuel economy in its SUVs is another signal that aluminium usage will increase even faster. Automakers are responding to consumer demands for cleaner, more efficient and safer cars and trucks. Hybrid-electric technologies get much attention, but cost and complexity are preventing their immediate, widespread use. It is a recognised fact that aggressive weight reduction is the best way to improve fuel economy, emissions and performance. For these reasons, as well as improved corrosion resistance and recyclability, automakers are more and more turning to lightweight, high-strength aluminium.

NALCO and BALCO have been identified for disinvestments. The government has decided to disinvest up to 51 per cent  of equity held in BALCO through sale to strategic partners. NALCO has authorised capital worth Rs 1300 crore and Rs 644.31 crore paid up capital and loan of 980 million of Euro-dollar. The government's stake in NALCO is about 87 per cent, which may be diluted further as it has set a target of disinvesting upto  Rs 10,000 crore through the sale of equity held by the government in PSUs.

As a result of the process of liberalisation of trade in aluminium, India has emerged as a net exporter of aluminium, on competitive terms. Government monopoly, in terms of aluminium production, removal of price and distribution control over aluminium, has been diluted in favour of private sector. The ownership pattern in private sector has undergone changes. With the takeover of INDAL by the HINDALCO, it has emerged as the major producer of aluminium in the country. It could be safe to conclude that Indian aluminium industry is a success story of the reforms, liberalisation, globalisation and privatisation drive in India.