Interest for a stake in India's second-biggest aluminium maker, National Aluminium Co (Nalco), has been strong, with about a dozen bidders submitting proposals.

"The response has been good," said Disinvestment Secretary Pradip Baijal, pointing out that foreign firms were among the likely bidders.

But domestic opposition to the sale is mounting.

Political parties and trade unions launched a 12-hour strike in the eastern state of Orissa, where the company's main plant is located.

Nalco is a test case for Indian privatisation, coming immediately after the Hindu nationalist-led government last week deferred stake sales in two large oil companies for three months because of cabinet differences.

Big tickets

The government, which owns 87% of Nalco, is initially selling a 29% holding in the company along with management control.

Among those reportedly interested are the world's second-biggest aluminium producer Russia's RusAl, Alcoa of the United States, Switzerland's Glencore and French metals group Pechiney.

"This could be the last chance for world majors to get a foothold in the Indian market," said John Band from financial consultants Zincortex in Mumbai.

In a second round of the Nalco sale, the government plans to cut its holding to 26% through stake sales of 10% to domestic investors, 20% through American Depositary Receipts and 2% to employees.

Delays

The government also hopes to complete the sale of a strategic stake in the country's biggest shipping line, Shipping Corp of India, by December, but needed "some time" to iron out minor problems, the Disinvestment Secretary said.

India has set a budget target of raising almost $2.5bn through stake sales in state-run firms in the year to March 2003, but has admitted it will fall short of the target after delaying the sales of the two large oil companies, Hindustan Petroleum and Bharat Petroleum.

The government's decision to delay these privatisations has sparked investor fears over the future of privatisation.