Copper Industry Seeks GST Cut as Record Prices Lock Up Cash

Indian copper producers are calling on the government to reduce the Goods and Services Tax (GST) on copper from 18% to 5%, citing record metal prices that are tying up working capital across the supply chain. The Indian Primary Copper Producers Association is in talks with the government to make this policy change, which could unlock as much as $3.6 billion of capital currently tied up in tax payments.

Copper has reached a series of record highs this year, with prices climbing above $14,700 a ton on the London Metal Exchange this month. This surge is adding to cost pressures in India, which has relied heavily on imports since the 2018 shutdown of Vedanta Ltd.'s Sterlite smelter.

The association's President, Rohit Pathak, said that higher working-capital requirements are being felt across the industry, including by primary copper producers such as Hindalco Industries Ltd. He noted that the upfront tax is borne by both primary producers and downstream manufacturers, locking up significant working capital that could otherwise be deployed toward industry expansion.