The existing duties imposed on various grades of copper including scrap and virgin copper which includes cathode and wire bars has virtually acted as a kind of "negative protection" to the domestic copper industry. Industry watchers view that a flat 30-per cent custom duty on these products is a major deterrent for the growth of the local industry. Apart from copper ore and concentrate which carries a low import duty of 5 per cent, other forms of copper in the form of scrap, virgin and semis have an uniform duty of 30 per cent, which has put local manufacturers of copper semis (rods and sheets) under pressure.

Import of copper is primarily in four categories including copper ore or concentrate, copper scrap, copper in virgin form (copper cathode and wire bars) and copper semis which includes rods and sheets. An analyst is of the opinion that the domesticcopper industry is well equipped to manufacture various copper and brass semis which use copper as raw material. This may be in the form of scrap or original virgin metal.

The problem gets magnified when finished goods which are semis have to be subjected to other taxes such as sales and other local levies. This essentially means that the manufacturer has to bear a tax burden of an extra amount apart from the 30 per cent.On the other hand, these extra taxes are not applicable on direct import of copper semis.

The anomaly is all the more glaring when compared to other metals wherein a differential duty structure exists between scrap, virgin metal and semis. Copper has a 30 per cent duty on scrap compared with the 5 per cent and 10 per cent on steel scrap and aluminium scrap respectively.

Steel and aluminium ingots carry a duty of 20 per cent compared to 30 per cent duty on copper. On rods and sheets, copper is on equal terms with steel, whereas aluminium has a duty of 20 per cent. An industry studyindicates that India has the highest rates of import duties on scrap residues, cathode rods, and other categories when compared to countries like Japan, USA, European Union, Indonesia, Thailand, Malaysia and Taiwan.

Industry analysts say that such differentials should be removed in the wake of a substantial growth in the local copper industry.

Industry estimates suggest that it would be advisable to maintain a 10 per cent difference between scrap and semis and 5 per cent difference between virgin metal and semis.

India being deficit in copper has to be necessarily imported from outside. Analysts predict a demand-supply gap in copper in India of 1.41 lakh tonnes in the next four years.