A number of small and medium copper alloy fabricating units are shutting shop due to the inverted duty structure which has made raw material import cost higher than the finished products.

Import of copper cathode and scrap, the basic raw material of the fabricating units, attracts a duty of five per cent, while the finished products such as copper sheets, foils and tubes are imported duty-free, leaving the value add industry that thrives on two per cent margin high and dry.

DK Jain, President, Indian Non-Ferrous Metal Manufacturers’ Association, told BusinessLine even the Indian companies manufacturing copper cathode and rods include the five per cent import duty while selling their products in the domestic markets and pocket about ₹1,300 crore from secondary producers.

In contrast, finished products are imported duty-free from countries which have signed free trade agreement with India besides Nepal and other Asean countries that have Preferential Trading Agreement, he added.

Primary copper producers such as Hindalco Industries and Vedanta import copper concentrates at 2.5 per cent import duty or even lower rate under free trade agreement to produce about seven lakh tonnes of copper cathodes, he said.

Import of copper plates and sheets from Thailand has risen steadily to 2,170 tonnes last fiscal from 385 tonnes in 2011-12. Similarly, shipments from Malaysia were up by over 16 times at 895 tonnes last fiscal from 54 tonnes in FY12. In all, imports from Asean countries increased seven times to 3,065 tonnes in the last three years.

Copper tube imports from FTA countries such as Thailand, Malaysia and Vietnam jumped more than four times to 22,716 tonnes in three years and it has already touched 9,293 tonnes in the first half of this fiscal.

Job loss Mahendra K Mehta, Managing Director, Indigo Metalloys, said nearly 15-20 units making value-added copper products have closed down in Gujarat and Rajasthan rendering thousands of people jobless.

“The industry has approached Ministries of Commerce and Finance, but the issue is being passed from one Ministry to another. If the Government does not intervene to correct the inverted duty structure more manufacturing units will close down and work against the much acclaimed ‘Make in India’ programme,” he said.

Most of the manufacturing units are operating at capacity utilisation of just 10 per cent above the break-even level and if the imports come in unchecked then more plants will shut down sooner than later, said Jain.

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