Industry body Assocham has urged the government to bring down the customs duty on copper concentrate to zero from the current 2.5 per cent, in order to provide a level-playing field to all stakeholders.
This move, it has said, will also help the industry compete with imports of value-added copper products from free trade agreement (FTA) countries under nil duty.
Copper concentrate is the basic raw material used by the copper industry.
"Given the non-availability of copper concentrate in India, there is no economic rationale to continue with import duty on copper concentrate and it is submitted to reduce customs duty on copper concentrate from 2.5 per cent to nil. This will enable us to have a level playing field and compete with imports of value added copper products, from FTA countries under Nil duty," according to the pre-budget suggestions by Assocham.
The Indian copper industry imports 95 per cent of the copper concentrate on account of its limited availability in the country. The domestic availability is merely 5 per cent of the total requirement.
The present customs duty on import of copper concentrates is 2.5 per cent whereas the refined copper is being increasingly imported into India at nil duty under the Free Trade Agreements, making it a clear case of an inverted duty structure.
Most leading economies such as Japan, China, Thailand and Malaysia do not have sufficient domestic concentrates but these countries allow free import of copper concentrate to ensure availability of this key metal for value addition in their country.
This has affected level-playing field for Indian smelters as the cost structure of smelters in those countries are lower on account of zero import duty on copper concentrate.
Sourcing of copper concentrates by India from some major countries is already threatened due to exports restrictions from supplier countries like Indonesia, an FTA partner country of India. This leaves India with limited option to source under FTA route from Chile which has long term commitments (up to 90 per cent of their production) to countries like Japan, China and others who have invested in Copper mines in these countries.
Unfortunately, apart from Chile and Indonesia, most of the copper concentrate surplus countries are not covered under FTAs with India.
No domestic downstream industry will be adversely impacted by duty reduction as it is a starting point of the refined copper value chain for bulk of the industry and will provide a much-needed relief to the industry which is suffering from extremely adverse trends in its value drivers.
Indian refined copper industry needs all the support from the government in sourcing its raw material and hence it makes immense economic sense to exempt it from customs duty.