Indian metal cos focused on domestic demand, resilient to US tariffs

New Delhi: Indian metal companies are gearing up for significant expansions in FY26, focusing on growing domestic demand, notwithstanding global trade headwinds.

While the United States has announced certain tariffs on metals, companies like Vedanta, JSW Steel, Hindustan Zinc (HZL), and NALCO are also betting on India’s strong demand, the global race for critical minerals, and strategic geographic diversification to drive growth, analysts said.

Domestic steel demand is forecast to grow by 10 per cent annually over the next few years. Similarly, aluminium demand is expected to grow at a CAGR of 7.2 per cent till 2030. Industry experts predict India’s aluminium demand will double every five years, supported by the Indian government’s allocation of Rs 11.21 lakh crore for infrastructure development in the 2025-26 budget.

As other countries face higher tariffs, companies may look to diversify production into India, creating a positive spillover effect on domestic demand.

Companies like Vedanta, Hindustan Zinc, and others with a strong domestic focus would thus be relatively insulated.

“The sharp fall in metal stocks across the board was a knee-jerk reaction. Going forward, the market will favour companies that derive the bulk of their revenues from domestic operations. Here, companies like Vedanta, Hindustan Zinc, and NALCO stand out since they are largely focused on the Indian market and their revenues will be driven by India’s growth story. We thus expect stocks of these companies to do better going forward,” said an analyst at a leading domestic brokerage.

FY26 expansion plans

Vedanta Limited, the aluminium-to-oil conglomerate, has significant expansion plans for the fiscal year driven by growth in India’s core sectors like infrastructure, railways, auto and defense. The company sells nearly 50 per cent of its total aluminium production in India.

Vedanta’s aluminium division is increasing production capacity to 3 million tonnes and has acquired one of Odisha’s largest high-grade bauxite mines to support this expansion. The company said in its third-quarter earnings call that its BALCO smelter expansion is at an advanced stage, with commissioning targeted in FY26. Vedanta Aluminium aims to increase its share of value-added products to over 90 per cent, from the current 60 per cent, to capitalize on India’s growing construction and electric vehicle markets.

Similarly, Vedanta’s subsidiary, HZL, has recently set up a 30,000 tonnes per annum zinc alloy plant in Rajasthan to cater to the growing domestic demand for value-added zinc alloys. Chairperson Priya Agarwal Hebbar recently said Hindustan Zinc has a vision of doubling its metal production to 2 million tonnes per annum within the next five years.