FTAs are hurting Indian copper product manufacturers

Copper markets in 2017 will continue to see an uptrend fueled by continued growth in demand from countries like China, India and those from South East Asia. This is clearly reflected in increasing copper prices which has gone up by more than 19 percent.

The impact of demonetisation was a concern in Nov-Dec of 2016 but going forward we should see an improvement in markets and subsequent demand with more cash flowing back into the system.

Indian exports of manufactured & engineering goods continue to be extremely poor. Government of India (GoI) had signed various trade agreements with an intention to scale-up the domestic industry by stimulating exports but its proving to be highly ineffective. FTAs has led to tax free imports from countries in ASEAN & Japan which are proving to be cheaper than domestically produced goods and this is impacting the domestic manufacturing sector like copper tubes, copper rods, motors and wire/cable markets quite adversely. The main reason for this is the inverted duty structure which we have in place – domestic manufacturers of refined copper end up paying higher duty for their inputs (copper concentrates) compared to imported finished products.