The world’s third biggest producer of aluminium, Alcoa Inc., plans to manufacture aluminium architectural products and systems in India to meet the rising demand for such products—used in commercial buildings—in the world’s second largest growing major economy.

Alcoa International Holdings Co., an affiliate of Alcoa, has filed an application with India’s Foreign Investment Promotion Board (FIPB) to do this, according to the finance ministry website. Foreign firms seeking to invest money for setting up units in India require clearance from FIPB, headed by finance minister P. Chidambaram.

Alcoa India Pvt. Ltd vice-president M.K. Premkumar and managing director Vipul Rastogi declined to comment on the proposal submitted to FIPB or on the manufacturing and investment plans of the firm.

The Alcoa Inc. headquarters building in Pittsburgh, Pennsylvania. Although India has several large aluminium makers, not many make finished architectural products

India’s booming real estate sector has triggered demand for aluminium composite panels used in the construction of buildings. “Aluminium has a huge market in all new generation buildings," said Dinesh Dubey, deputy general manager at Bangalore-based real estate firm Brigade Group.

Although India has several large aluminium makers, including Hindalco Industries Ltd, Indian Aluminium Co. Ltd (Indal) and state-owned National Aluminium Co. Ltd and Bharat Aluminium Co. Ltd (Balco), not many make finished architectural products. “The real estate sector is seeing a huge boom in terms of funds inflow. So this is the right time to start manufacturing these products in India," said Dubey.

India has huge reserves of bauxite, the key raw material for making alumina. India’s bauxite reserves are spread across Orissa, Andhra Pradesh and Gujarat. It requires three tonnes of bauxite to make one tonne of alumina, which has to be processed to produce aluminium. It takes two tonnes of alumina to make one tonne of aluminium.

It is not known whether Alcoa will set up an alumina plant in India to make aluminium products or import alumina and process it here to make products used in the building industry.

With global bauxite prices ruling at around $60 per tonne and an additional $40-50 per tonne for logistics and handling costs, it makes commercial sense for Alcoa to set up an alumina plant in India that can feed its aluminium products unit, says experts. However, “for this, Alcoa needs to have mining licences in India. The cost economics will not work out if it imports bauxite and processes it here," said S.V. Rao, general manager (finance) at Nalco.

To set up a alumina plant with a capacity of a million tonnes a year, Alcoa would require bauxite mines with reserves of 60-70mt over a 20-year period, added Rao.

Alcoa had expressed interest to buy Balco when the government was selling its stake in the company in 2001. Balco was subsequently acquired by the Anil Agarwal-promoted Sterlite Industries Ltd which has since renamed itself Vedanta Resources.