SMM6 17: as a result of the free trade agreement (FTA), foreign copper concentrate into India does not have to pay tariffs, which leads to India's domestic copper industry chain is facing great challenges. Downstream manufacturers are under tremendous competitive pressure, which has led to the closure of many factories, thereby reducing the number of jobs.
Analysts expect India's copper industry chain to cut 10, 000 jobs by 2022, accounting for about 1/10 of India's copper industry chain's direct employment.
In terms of refined copper production, India's domestic copper industry chain can be self-sufficient, in short, there is no need to import to meet domestic consumption.
India's copper industry has a nameplate capacity of 1 million tons per year, enough to meet domestic demand for 700000 tons of refined copper. And because major manufacturers such as Adani Group and Vedanta Ltd have decided to increase production capacity, the rated capacity of the copper industry is expected to reach 2.4 million tons by 2025, when domestic refined copper consumption is expected to reach 1.5 million tons.
However, the current situation is that although the annual production capacity of Indian refined copper and related products is sufficient to meet domestic demand, imports of refined copper still account for about 40 per cent of the domestic market share as a result of the free trade agreement (FTA).
Because under the terms of the free trade agreement (FTA), foreign refined copper does not have to pay tariffs to enter India's domestic trade market, but India's domestic refined copper producers have to pay a 2.5 per cent import tariff when importing copper concentrate.
At the same time, due to the lack of high-quality copper mines in India, domestic copper concentrate can only meet the demand of 4% of the industry, resulting in Indian refined copper producers having to pay import tariffs. And have to rely on imports of copper concentrate from abroad to ensure production.
As a result, the inverted tariff structure has contributed to the huge annual compound growth rate of 100 per cent in refined copper imports over the past six years, posing a huge survival challenge to India's own copper industry chain.
To improve the survival of the copper industry and overcome the inverted tariff structure, the Indian Primary Copper Producers' Association (IPCPA) urged India's finance ministry to abolish a 2.5 per cent tariff on copper concentrate. IPCPA also said that major copper producers such as China, Japan, South Korea and the European Union had introduced zero tariffs on copper concentrate imports, further affecting the level playing field for Indian copper producers.