Industry body Assocham has urged the
government to reduce the customs duty on copper concentrate to zero from 2.5%
to provide a level playing field to all stakeholders.
The move will help the
industry to compete with imports of value-added copper products from free trade
agreement (FTA) countries under zero duty. Copper concentrate is the basic raw
material used by the copper industry.
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Assocham in its pre-budget suggestions said,
due to the non-availability of copper concentrate in India, there is no
economic rationale to continue with import duty on copper concentrate. Bringing
down the customs duty will enable the industry to have a level playing and
compete with imports of value-added copper products from FTA countries under
The Indian copper
industry imports 95% of the copper concentrate due to its limited availability
in the country. The domestic availability is merely 5% of the total
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Currently, 2.5% customs duty is charged on the
import of copper concentrate whereas refined copper is being imported
into India at zero duty under free trade agreements, which makes it a clear
case of an inverted duty structure.
Most Asian economies such as Japan, China,
Thailand and Malaysia do not have sufficient copper concentrate and these
countries allow its free import. The cost structure of smelters in those
countries is lower on account of zero import duty.
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Export restrictions in supplier countries like
Indonesia, an FTA partner country of India, leave India with the limited option
to source from Chile, which has long-term commitments (up to 90% of
production) to countries like Japan and China, which have invested in copper
mines in these countries.
Unfortunately, apart from Chile and Indonesia,
most of the copper concentrate surplus countries are not covered by FTAs with
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Duty reduction will not impact the domestic
downstream industry because it is a starting point of the refined copper value
chain for the bulk of the industry. It will provide much-needed relief to the
industry, which is suffering from extremely adverse trends in its value
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The Indian refined copper industry needs all
the government support in sourcing its raw material and hence it makes immense
economic sense to exempt it from customs duty.