Indian Copper Producers Seek GST Cut Amid Record Prices

Indian copper producers are seeking a reduction in the Goods and Services Tax (GST) on copper products from 18% to 5%. The Indian Primary Copper Producers Association is negotiating with the government for this tax break, which could release as much as $3.6 billion currently tied up in tax payments.

Copper prices have hit record highs this year, surpassing $14,700 a ton on the London Metal Exchange this month. The surge in prices is exacerbating cost pressures in India, where the industry relies heavily on imports due to the 2018 shutdown of Vedanta Ltd.’s Sterlite smelter.

The higher copper prices are causing working-capital requirements to skyrocket across the industry, including for primary producers like Hindalco Industries Ltd. These companies need to pay upfront taxes when purchasing feedstock for processing and buying copper products.

With high tax rates locking up significant capital that could be invested in expansion, the domestic copper industry is pushing for a GST reduction. The sector is currently undergoing a multibillion-dollar investment push.