India's copper industry flags CEPA threat as imports from UAE surge

New Delhi, Oct 2 (PTI) The Indian Primary Copper Producers Association (IPCPA) has raised concerns over rising copper rod imports from the UAE under the India-UAE Comprehensive Economic Partnership Agreement (CEPA), warning that the trend threatens domestic investments in copper refining.

Since 1996, Indian producers - Hindustan Copper Ltd, Hindalco Industries, Vedanta Ltd, and Kutch Copper Ltd (Adani Group) - have built a domestic refined copper capacity of 1.25 million tonne, against a projected demand of 0.85 million tonne for FY25. The industry had plans to expand capacity further in the coming decade.

However, IPCPA in a letter to the commerce ministry said CEPA poses "a significant obstacle" to these plans, as the UAE, despite having no copper mining, smelting, or refining infrastructure, is exporting copper rods to India with minimal value addition. The UAE firms merely convert imported copper cathodes into rods, a process that alters the tariff classification but adds negligible real value, according to IPCPA.

Imports remained low in FY23 and FY24 due to phased tariff reductions under CEPA. But the duty on copper rods was reduced from 2 per cent to 1 per cent in May 2025 and is scheduled to be fully eliminated by May 2026.

As a result, copper rod imports from the UAE nearly doubled to 86.06 kilotonnes in FY25 from 43.45 kt in FY24. Non-advance authorization imports surged 239 per cent, from 18.82 kt in FY24 to 63.89 kt in FY25. In the first four months of FY26 alone, imports hit 42.71 kt - already half of FY25 levels.

"We are seeing a clear uptick in imports under CEPA, and expect a further surge once duties are brought down to zero," the association warned, citing similar trends under other FTAs like India-ASEAN and India-Japan.

IPCPA also criticized the high tariff rate quota (TRQ) of 85,000 tonnes for copper rods under CEPA, calling it excessive and lacking protective value for domestic producers.

With Chinese-controlled supply chains dominating the copper flow into UAE and negligible local processing, IPCPA cautioned that the current Product-Specific Rule (PSR) under CEPA is allowing minimally processed goods to enter India duty-free - undermining the domestic copper industry's long-term viability.

"India-UAE Comprehensive Economic Partnership Agreement (CEPA) presents a significant obstacle to the domestic copper manufacturing sector," IPCPA said.

In 2022-23, and 2023-24, imports under the CEPA were low. This, according to the Association, was largely because the duties are being reduced in a phased manner over a period of five years.

"We can see imports from the UAE increasing under India-UAE CEPA," it said.

The import duty on copper rods was 2 per cent until April 2025 and has been reduced to 1 per cent from May 2025. It is scheduled to be further lowered to nil in May 2026.

"The import duty will be reduced to zero in May 2026, which will result in a significant surge in imports of copper rods from the UAE," the Association said. "We have seen the similar trend emerging with other FTAs wherein the duties on finished goods were made nil, and imports rose dramatically deterring investments in India eg India-ASEAN, India-Japan etc." IPCPA said the tariff rate quote (TRQ) granted to refined copper rods in the UAE CEPA is also artificially high. The TRQ for 2022-23, the year the CEPA came into existence, was 85,000 tonne. First, this quota does not provide industry with any protection.

"The UAE, without any copper mining, smelting, or refining infrastructure, is able to route minimally processed copper rods to India by taking advantage of the current Product-Specific Rule (PSR) under CEPA. This, combined with the negligible value addition in the UAE's copper processing and the overwhelming dominance of Chinese-controlled supply chains, poses a direct challenge to India's investments in copper smelting and refining," it said.

The Association has urged the removal of "melt, cast, and rolled" from the current Product-Specific Rules (PSR) and called for a revision of the Rules of Origin. It recommended that non-originating materials used in a product should fall under a different tariff subheading, and the revised PSR should require a minimum value addition of 40 per cent. Additionally, it has sought to cap the TRQ for copper wire rods at 20,000 tonnes per annum. PTI ANU ANU