Budget 2020 India: IPCPA has demanded an increase in the import duty on refined copper to increase domestic capacity utilization. Refined copper imports are levied 5% duty and the industries demand government must hike it to 7.5% to reduce the influx.
Union Budget 2020 India: Indian Primary Copper Producers Association (IPCPA) has sought government’s nudge to bring major policy changes pertaining to copper industries in Budget 2020 such as exemption of import duty and abolition of inverted duty structure on copper concentrates. The IPCPA has also sought a hike of 2.5% in import duty on both the copper scraps and refined copper to make domestic copper viable by preventing dumping off of cheap scrap exports. The industries sought exemption of import duty on copper concentrate because of limited domestic availability of one of the key components in copper metal manufacturing. India produces only 4% of copper concentrates demanded by its domestic industries.
Copper consumption in India is growing at 10 per cent CAGR and the per capita copper consumption is likely to be doubled by the year 2026. The current per capita consumption stands at an abysmal low of 0.5 kg compared to global and Chinese intake. India will become a market of 1.5 million megatonnes per annum by the year 2026. The surge in consumption and demand synergized with limited availability of copper concentrate required for copper metal manufacturing proving to be unsustainable for copper industries, the industry’s representatives opined. Another aspect of the copper concentrate imports that is leading the sector in a quagmire is the countries copper concentrates are imported from. 45% of Indian copper concentrates are met by imports from duty paid non-FTA nations such as Australia and Peru.
Indian copper industries face a double whammy of expensive raw materials owing to higher import duty as well as the shortage of it due to policy changes in the exporting countries. Indonesia has reduced its copper exports to India significantly from 3,38,387 tonnes in FY 16 to 1,25,784 in FY 19. China has been protecting copper concentrates from other countries through strategic investment plans. These factors expose Indian copper industries on the brink of raw materials exhaustion. The sharp increase in demand for Copper and the volatility of raw materials require government attention to develop multiple raw materials sources.
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The copper industry is waiting for a crisis to emerge as its trade surplus of 41.2 billion in FY 2011 has been squandered to a mammoth deficit of $4.3 billion. A booming copper manufacturing industries have the potential to provide 1 lakh direct and 4 lakh indirect jobs as well as 1000 SMEs.
IPCPA has demanded an increase in the import duty on refined copper to increase domestic capacity utilization. Refined copper imports are levied 5% duty and the industries demand government must hike it to 7.5% to reduce the influx. India had imported 3,34,000 MT refined copper in FY 2019 which was 45% of the domestic demands. The FTAs India signed with ASEAN countries and Japan also play a vital role in the surge of refined copper imports as the import duty gets reduced less than the import duty on copper concentrate under the provisions of FTA.
IPCPA has argued the need for a tighter policy on the copper scrap imports to prevent revenue loss due to unregistered scrap importers and an increase in import duty to 7.5% to prevent unnecessary inflows. They cited the Chinese case that has put a restriction on copper scrap imports under their National Sword Policy. India had imported 79 kilotonnes of Copper scrap in FY 2019 which was an astounding 75% surge from FY 2018.