India's Aluminum Industry: Productivity, Energy Efficiency and Carbon Emissions

Historical estimates of productivity growth in India's aluminum sector vary from indicating an improvement to a decline in the sector's productivity. The variance may be traced to the time period of study, source of data for analysis, and type of indices and econometric specifications used for reporting productivity growth. Our analysis shows that in the twenty year period, 1973 to 1993, productivity in the aluminum sector declined slightly by 0.2%. An econometric analysis reveals that technical progress in India's aluminum sector has been biased towards the use of energy, while it has been labor saving. The decline in productivity was mainly driven by a decline in the 1970s when capacity utilization was low and the energy crisis hit India and the world. From the early 1980s on productivity recuperated. We examine the current changes in structure and energy efficiency in the sector. Our analysis shows that the Indian aluminum sector has high potential to move towards world-best technology, which will result in fewer carbon emissions and more efficient energy use. Substantial energy savings and carbon reduction options exist.