Indian copper industry may end up shedding 10,000 jobs by 2022

The domestic copper industry, comprising the primary and downstream segments, is estimated to be around Rs 60,000 crore per annum

At a time when the country’s unemployment has peaked at a record four-decade high, the domestic copper industry is silently grappling with its own sombre scene on jobs. Assailed by unchecked imports, Indian copper industry may end up shedding 10,000 jobs by 2022. 

“Increasing imports pose huge challenge to domestic copper industry by way of threat to downstream final goods producers in India, hitting livelihood of several persons directly or indirectly employed in the industry, due to closure of units and resulting in loss of employment. On the basis of the information collected through survey by IIFT (Indian Institute of Foreign Trade), at least 50 firms in recent past have closed operations”, said an industry source.

The domestic copper industry, comprising the primary and downstream segments, is estimated to be worth Rs 60,000 crore per annum, employing over 100,000 people directly and generating indirect employment many times over.

Copper manufacturing boasts of a nameplate capacity of one million tonnes per annum (mtpa), sufficient to cater to the domestic demand pegged at 0.7 million tonnes. With major players like Adani Group and Vedanta Ltd having firmed up ramp-up plans, the rated capacity is envisaged at 2.4 mtpa by 2025 when domestic consumption is projected to touch 1.5 million tonnes.  

The country’s self-sufficiency in refined copper production and value added products obviates the need for imports. Still imports, catalysed by Free Trade Agreements (FTAs), have grabbed a 40 per cent share in the domestic consumption pie.

Copper producers are flustered by existing duty anomalies which seemingly bolster imports at the expense of local production. Imports of finished goods with countries bound by Free Trade Agreements (FTAs) attracting zero duty. Ironically, India’s copper producers have to fork out 2.5 per cent duty on import of copper concentrates, a raw material they are forced to import due to a lack of good quality copper deposits in the country. Domestic availability of the raw material meets only a measly four per cent of the industry’s requirement.

The inverted duty structure explains the immense growth in imports- they have soared 100 per cent CAGR (compounded annual growth rate) from FTA countries in the last six years. Import of refined copper (amply produced in India) is riding high only on account of the duty arbitrage under ASEAN FTA.

Against this hostile backdrop of imports, the Indian Primary Copper Producers’ Association (IPCPA) has urged the Ministry of Finance to abolish the 2.5 per cent duty on copper concentrates to help maintain the viability of the industry and overcome the inverted duty structure. The wishlist ahead of the 2019-20 Budget is also laced with other justifiable demands- raising customs duty on refined copper products from 5 per cent to 7.5 per cent, enforcing stricter operating norms for scrap recyclers to conform to environment friendly processes and imposing environment cess on imported scrap depending on its copper content.

IPCPA said that major copper producing countries like China, Japan, Korea and European Union (EU) are already importing copper concentrates at zero duty. This has impacted the level playing field for India’s copper producers despite their positioning in the lowest quartile of the cost curve.