The domestic copper power producers are in a precarious situation amidst sagging sales and rapidly rising imports. They blame a clutch of policies being pursued by the government with regard to imports and exports will have to be changed if the sector has to be saved from prospect of heavy losses in future.
“In our representation to the Ministry of Finance, we have sought that customs duty on copper products be increased from 5 per cent to 7.5 per cent. Customs duty on copper concentrate be reduced from 2.5 per cent to nil and reinstate 2 per cent export incentive,” said JC Ladha, Vice President of Indian Primary Copper Producers Association (IPCPA).
The domestic copper industry, which has an installed capacity of 10 lakh metric tonne, is almost entirely dependent on imports for importing copper concentrate. China and Japan have been incentivizing the copper industry by securing copper concentrates through government-backed finance linked investments cum strategic tie-ups in copper mines in Africa and Chile. Meanwhile, Indonesia, the only major supplier of copper concentrate in ASEAN region has put massive export tax on exports and will enforce total ban in 2017. Indian manufacturers will now have to source copper concentrate from Peru, Chile and Australia after signing long term contracts, this is important as availability of affordable raw material is key to scale up operations and be cost competitive.
The domestic copper industry has rapidly lost their share in domestic market as imports in the past three years have increased from 1.06 lakh tones to 1.77 lakh tones. This increase of imports to the tune of 67 per cent has affected domestic industry, which is now operating at 75 per cent of capacity with imports constituting a whopping 31 per cent of total sales in the country.
P. Ramnath, CEO of Sterling Copper said that the industry, which employs 10,000 people directly and 50,000 people indirectly will face an existential crisis when the free trade agreements (FTA) like AIFTA and India-Japan CEPA. The IPCPA has said that Japan, which is the 3rd biggest manufacturer of refined copper in the world has a surplus of half a million tonnes of copper, which is equivalent to the total yearly consumption in India. Indian companies cannot compete with imports from Japan as industries there enjoy zero rate of interest compared to India, which has one of the highest rates of interest in the world. Japan also has strategic finance linked tie-ups with Chile for import of copper concentrate, which greatly help their industry.