Govt-Cu industry coordination vital to unleash full potential

After the two successful major reforms viz demonetization & GST, India is well poised to touch 7-8% GDP growth consistently. The Indian economy is estimated to touch $5 trillion by 2025 and the country today has grown well ahead of rest of the world, as per study. 

This will certainly impact the overall manufacturing growth and in tandem bodes well for the domestic copper sector. At present the size of the Indian copper industry is around Rs 50-60 thousand crore  employing 1 lakh directly and many lakhs indirectly serving more than 1,000 SMEs that form the backbone of power and other infrastructure Industries. 

India’s production of refined copper has been increasing but at a diminishing rate. The domestic demand for copper has risen rapidly over the years and is expected to rise further as a result of various projects like Make in India, infrastructural investment etc. 

According to Wood Mackenzie, India is expected to be the 6th largest copper market by 2020.

However, the industry is plagued with many challenges that can impact the domestic production. For instance, copper concentrate availability is becoming scarce year after year; stringent environmental norms; policy and political risks; etc among others.

Further, continuous surge in imports through FTAs has become a major cause of concern. China’s “National Sword Policy” can lead to inflow of unregulated scrap into the country. 

Post FTA, the refined copper imports are estimated to have trebled in 5 years, experts say. The on-going Regional Comprehensive Economic Partnership (RCEP) negotiations is going to be the biggest threat to domestic copper industry with the inclusion of China in the mega FTA.

India’s exports to FTA countries  has not gone up in the same proportion as imports because the pace of duty reduction in India was much faster compared to most of the other FTA countries. FTAs have led to increased imports and exports, although the imports in to India has been greater.

According to a survey, FTAs have bigger impact on metals on the importing side. A 10 percent reduction in FTA tariffs for metals increases imports by 1.4%

Government, therefore, needs to understand the genuine concern of the Indian copper industry. Suitable changes in policy will definitely help Indian copper industry to grow, and meet not only the domestic demand, but semis export on bigger scale can be explored.