There are glimmers of hope for India’s copper sector
The elimination of duties from copper tubes and pipes from ASEAN countries has crippled the domestic sector. The commerce ministry’s recent move for an anti-subsidy duty investigation could revive things.
The Government of India’s Aatmanirbhar Bharat initiative is advancing at various fronts and this is building trust among industries. The government has identified 12 sectors in which India can become self-reliant and a global supplier, in which copper is one of the major sectors.
India’s copper industry is quite old and has been always aligned with India’s economic growth. However, unorganised players in this sector have been facing issues due to low priced imports, especially with India entering into certain treaties such as the Free Trade Agreement (FTA) with the Association of Southeast Asian Nations (ASEAN).
India signed an FTA with ASEAN in 2009 which entered into force on January 1, 2010. The agreement led to the reduction and elimination of duties on copper tubes and pipes for imports from ASEAN nations. While customs duty on raw material remained at 5 per cent, finished goods attracted zero per cent duty starting 2014.
Imports from ASEAN have reached levels where currently the imports only from Vietnam, Malaysia and Thailand account for about 90 percent of total copper tubes and pipes imports into India, out of which 70 percent are coming from Vietnam while Malaysia and Thailand add another 20 percent.
The Indian domestic industry is self-sufficient to cater to the country’s demand, but has shrunk to a level when it now has only about 20 percent market share in India.
On November 5, anti-subsidy duties were imposed on continuous cast copper wire rods. Copper tubes and pipes use the same raw material as copper wire rods and both industries have been facing similar issues due to subsidies given by governments in ASEAN countries and significant investment by Chinese in the ASEAN region.
In fact, the plight of copper tubes and pipes manufacturers has been worse, as a major part of this industry is unorganised. Various attempts have been made by the copper tubes and pipes industry to get some relief from imports; however, nothing came as an immediate rescue to the industry. Meanwhile, as per industry sources, about 20 out of 42 copper tubes and pipes companies have shut shop.
The Bombay Metal Exchange (BME), the apex body of traders and manufacturers which have about 50 member producers of copper tubes and pipes, and INFMMA (Indian Non-Ferrous Metal Manufacturers Association) have tried to seek relief at various levels concerning aspects such as import surge, inverted duty structure and exclusion of copper tubes and pipes tariff lines from a positive list of a future trade agreement such as the Regional Comprehensive Economic Partnership (RCEP).
In response to their various submissions, the Directorate General of Trade Remedies, Ministry of Commerce, has now initiated suo-moto anti-subsidy duty investigation on September, 25. This is a global first investigation of its kind.
The directorate before initiation took cognisance of the information provided by the BME and also the customs import data, and invited the Governments of Thailand, Vietnam and Malaysia for a pre-initiation consultation. Thailand and Vietnam have revealed that schemes available to exporters of copper wire rods could prima facie also be availed by the exporters of copper tubes and pipes. Malaysia refused the consultation request, due to the non-availability of a petition from the domestic industry. Keeping in view these facts, the authority initiated the countervailing duty investigation. It has to be also noted that this investigation is unlikely to have an impact on the ASEAN FTA.
The initiation of this investigation is itself a much-awaited relief for the industry. It is indeed a positive step taken by the government towards supporting an industry under stress. For a quick relief, authority may provide an interim relief to the industry in a few months’ time; the completion of this investigation, however, will take 12-18 months.
This will be a good example of the government’s stress on Aatmanirbhar Bharat.
Jyoti Singh Rathore is Assistant Secretary-General, Forum for Trade Remedies (FFTR), New Delhi. Views are personal.