Adani And Reliance Want A Share Of India's Aluminium Boom. Here's The Catch

By Amritha Pillay

What?  

India’s aluminium industry has long been dominated by two conglomerates — Aditya Birla Group and Vedanta — for decades.

Now, two of India's wealthiest groups, Adani Group and Reliance Industries Ltd, seem keen to join them.

​​The timing is not a surprise. India's aluminium demand is expected to grow by 5-6% annually over the next decade, driven by investments in electricity transmission and distribution, renewable energy, electric vehicles and construction.

Both Adani and Reliance have also stepped up investments in green energy, a sector expected to contribute significantly to future aluminium consumption.

However, the new entrants will not be able to win this sector only with deep pockets. Access to bauxite, reliable power supplies and production scale have to be built, and the incumbents have had years to do so.

For Adani, the ambition is taking shape through an $11.5 billion integrated aluminium project in Odisha. Reliance, meanwhile, has reportedly expressed interest in a bauxite block in the state, although it has yet to publicly announce any aluminium plans.

Why?

Aluminium production is a cost-intensive business, and access to bauxite and affordable power will decide how competitive the new projects can become.

India has substantial bauxite resources. Yet it has been a net importer of the mineral since 2018, as alumina refining capacity has expanded faster than domestic mine development. With more refining and smelting capacity being planned, the pressure on raw material supplies is expected to increase.

As Neha TU, senior analyst at commodity market rating firm BigMint, puts it, “Bauxite availability is not the primary constraint for new aluminium entrants in India; securing economically viable, long-term supplies is.”

What Next?

India has vast bauxite resources estimated at 4,958 million tonnes as of April 1, 2020, according to Ministry of Mines data. Producing one tonne of aluminium requires approximately four tonnes of bauxite.

But large reserves have not translated into adequate domestic supplies. India has been a net importer of bauxite since 2018, and the deficit is only expected to widen.

McKinsey estimates net imports reached approximately 4.5 million tonnes in 2025, with Guinea accounting for around 90% of imports.

The gap could widen as more refining capacity.

McKinsey estimates India's domestic bauxite deficit could increase from approximately 0.4 million tonnes in 2025 to 7.7 million tonnes by 2030 and 17.3 million tonnes by 2035.

Existing and new entrants will have to navigate this deficit to make a mark in India's aluminium sector.

Bauxite is only one part of the equation.

Aluminium production is highly energy-intensive, making power costs another major determinant of profitability.

Adani and Reliance could attempt to offset some of their raw material disadvantages through a combination of domestic and imported bauxite and the power cost benefits of their respective green energy ecosystems in Gujarat. But their established competitors have spent years improving operational efficiency and securing backward integration.

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55.8

That is how much India’s services PMI stood at in October, up from 55.2 in September and the strongest expansion since June, according to the HSBC survey released on Wednesday. Stronger domestic demand and new client acquisitions lifted new orders, with Finance and Insurance leading growth. The composite PMI rose to 56.2 from 55.9.

Catch Up Quick: Input cost inflation eased to its lowest level since August 2020, while fewer than 3% of service providers raised selling prices. Consumer Services was the only segment where cost pressures accelerated from September.

Critical Moment: Hiring slowed to a four-month low, new export orders grew at their weakest pace since February 2023, and business confidence declined from September.

“Some service sector businesses have sufficient capacity to meet current staffing requirements,” said HSBC chief India economist Pranjul Bhandari.

India’s Big Battery Push

India is stepping up efforts to expand its energy storage capacity as it looks to make renewable power more reliable.

The Union Cabinet has approved Rs 14,500 crore ($1.53 billion) for a viability gap funding scheme to support grid-scale energy storage projects, Information Minister Ashwini Vaishnaw said on Wednesday, Reuters reported.

Fast Facts: The scheme aims to support 92 GWh of storage capacity over five years, from FY27 to FY31. This includes 60 GWh of pumped hydro storage, 30 GWh of battery storage and 2 GWh from emerging storage technologies.

The projects are expected to attract total investments of around Rs 97,600 crore.

Background: Solar and wind power generation depends on weather conditions and time of day. Storage systems can store excess electricity when supply is high and release it when demand rises or renewable generation falls.

This can help stabilise the power grid and improve the reliability of renewable energy.

War Strikes India’s Green Goals

India has dropped FY26 greenhouse gas emission targets for 21 petroleum refineries and 173 textile units, with the West Asia war adding to the economic pressures facing these industries, Business Standard reported. 

How We Got Here: Under India's Carbon Credit Trading Scheme, launched in 2023, covered industries must reduce emissions intensity, or greenhouse gas emissions per unit of output. Companies that outperform their targets can earn tradable carbon credits.

The Turning Point: The government first issued the amendment on September 7, although the development is now drawing attention to the impact of rising input costs on India's decarbonisation plans. Oil marketing companies have struggled to absorb higher crude procurement costs without passing them on to consumers, while textile manufacturers face pressure from rising operating costs. The FY27 targets remain unchanged.

FSSAI Targets Energy Drink Labels

India’s food regulator has accused PepsiCo and Monster Beverage of misleading consumers by marketing their high-caffeine products as energy drinks.

The allegations, made in court filings reviewed by Reuters, come as the companies challenge a ban on using the term on their labels.

Catch Up Quick: In June, the Food Safety and Standards Authority of India (FSSAI) barred companies from using the term “energy drink”.

PepsiCo and Monster have challenged the decision, arguing that the regulator acted without prior warning or giving them a chance to be heard. FSSAI has asked the court to dismiss their petitions, saying India has never established standards for an energy drink category.

The regulator has raised concerns about the high caffeine and sugar content of these beverages, along with taurine. It says the issue involves both public health risks and misleading labels.

Impact: India’s energy drinks market is expected to reach $1.6 billion by 2028, growing 12.6% annually, according to Euromonitor, reported by Reuters.

The Delhi High Court has allowed companies to sell existing stock carrying the old labels, but not use them on new stock.

Ethanol Blending Set To Slip

India’s push to replace imported oil with home-grown biofuel has hit a setback, as the weakest monsoon rainfall in more than a decade hits corn and sugarcane crops and forces New Delhi to put food security ahead of ethanol production.

According to a Reuters report, ethanol’s share in petrol is set to fall below the official 20% target in the supply year that began this month, undoing gains from reaching the goal some five years early. A sustained drop would leave India more reliant on overseas crude.

Overview: A severe El Niño cut monsoon rainfall by nearly 13%, and prices of corn and sugar shot up about 40% to record highs, while rice rose 20%. Food inflation also climbed to 7.74% in September from 5.97% a month earlier.

Producers now expect ethanol blending to fall to 15% to 17%. That leaves distilleries, which built up capacity of about 20 billion litres a year, with far more capacity than they can use.

Setup: The government has told oil companies not to buy ethanol made from sugar-based feedstocks and cut the price of corn-based ethanol to Rs 68.86 per litre from 71.86.

“Food has to take priority over fuel, more so in a drought year,” said agribusiness expert GK Sood.

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The Impact Of The US Midterm Elections On India

On Episode 1026 of The Core Report, financial journalist Govindraj Ethiraj talks to Ambareesh Baliga, Veteran Market Expert; Sid Swaminathan, CEO at Jio Blackrock; and Indrani Bagchi, CEO at Ananta Aspen Centre.

• Markets, Oil And The Rupee

• How Are Indian Markets Going To Respond To The Outcome Of The US Midterm Elections?

• US Midterm Elections Impact On Global Investing Themes And AIO Investments

• The Geopolitical Impact Of The US Midterm Election Outcome