With the Refined Copper Quality Control Order (QCO) effective from December 1 and Japanese suppliers, who account for 80 per cent of India’s copper imports, still awaiting certification, the downstream industry has warned the government of a supply crunch. More than three months.
Due to insufficient domestic production, India depends on imports for 30-40 percent of its refined copper requirements, an important raw material used to manufacture electrical wires and cables. In 2023-24, it imported refined copper from Japan worth Rs 16,500 crore.
Now, with the QCO issued by the Ministry of Mines, producers across the world, including Japan, have been banned from exporting processed copper to India without certification from the Bureau of Indian Standards (BIS).
Currently, BIS is reviewing applications from seven Japanese firms it received in January this year. “BIS will soon certify two Japanese companies. With that, there are enough verifications,” a senior official told The Indian Express.
However, the downstream user associations have requested the Ministry of Mines to move the implementation date forward by four months as a 90-day shortage has been created due to the QCO. Without Japanese imports, downstream users would lose access to nearly 1 million tonnes of refined copper in three months.
“Japanese suppliers halted shipments of refined copper in mid-October to avoid clearance issues, as the cargo takes 45 days to reach India. If the QCO is relaxed immediately, it will take another 45 days for the shipment to arrive here. In total, there will be a shortage for at least 90 days,” said a senior industry executive. The shortage of copper could increase input costs and halt production of wires, cables and other electrical equipment.
Under the influence of QCO, four domestic producers including Adani’s Cutch Copper Limited, Hindalco Limited, and Vedanta Limited and three foreign producers – one in Austria and two in Malaysia – are BIS-certified to supply refined copper to the Indian market. In 2023-24, imports from Austria and Malaysia were only 1 percent in terms of value.
The Ministry of Mines and BIS did not respond to requests for comment. The Japanese embassy in New Delhi also declined to comment on the matter as “it is still being coordinated”.
The Ministry of Mines issued a QCO on August 31, 2023, originally to come into force three months later, to ban the import of declining refined copper. However, after industry stakeholders highlighted that it usually takes 8-12 months for foreign manufacturers to obtain BIS certification, the ministry extended the implementation by six months.
Stakeholders for the expansion were represented by Embassy of Japan, Embassy of India in Tokyo, Department of Promotion of Industry and Internal Trade (DPIIT), Indian Electrical and Electronics Manufacturers Association (IEEMA), Winding Wires Manufacturers Association. (WWMA), and several domestic manufacturers, according to documents reviewed by The Indian Express.
In a letter to Mines Secretary VL Kanth Rao in October, 2023, then-DPIIT Secretary RK Singh warned that imposing QCO on Japanese producers without certification would “severely disrupt production activities”.
Singh noted that imports accounted for 26.8 percent (6.76 lakh tonnes) of India’s refined copper consumption in 2022-23, with Japan as the main source. “Due to QCO’s notification… non-BIS certified copper cannot be imported into India which will seriously hamper manufacturing of copper products in India including PLIWG (Production Link Promotion Scheme for White Goods) beneficiaries,” he wrote.
In May this year, the Ministry of Mines extended the QCO for an additional six months, effective from December 1, as no Japanese producer had received BIS certification. In the same month, export-oriented units were exempted from all QCOs notified by the Ministry of Mines, providing some relief to exporters. However, the bulk of copper consumption is driven by the domestic market, which includes various medium and small enterprises.
In a May note, Shakil Alam, the ministry’s economic adviser, warned of potential supply chain disruptions if the deadline is not extended. “There may be supply tightness in copper cathode affecting the supply chain for Indian industrial users such as electrical wires, winding wires, etc.,” he wrote.
The certification delay stems from mandatory resistivity testing, which requires Japanese refiners to produce thin copper wires and test their conductivity at a BIS-approved laboratory in India. Notably, London Metal Exchange (LME) standards for copper do not mandate resistivity testing. Since Japanese smelters are not vertically integrated, they have faced logistical challenges in producing wires and conducting tests in India.
“India is up to 30 per cent import dependent on copper cathodes. >80% of India’s refined copper imports come from Japan, whose refiners have established supply chain relationships with Indian users. It is very likely that Japanese refiners will only be able to obtain certification in about 4-5 months time. Meanwhile, M/s Adani’s Kutch refinery will start operations only in August, achieving peak production capacity of 0.5 MMTPA only in November-December,” Alam highlighted.
Adani Enterprises Ltd’s newly commissioned copper smelter in Kutch is expected to reach its peak capacity of 5 lakh tonnes per annum only by 2025-26, according to details shared by the company in its latest earnings call.
Currently, Aditya Birla Group’s Hindalco leads with the largest operational refining capacity of around 5 lakh tonnes, followed by Vedanta at around 2 lakh tonnes. Gujarat Victory Forgings Pvt Ltd also operates with a smaller capacity of 6,000 tonnes per annum. Notably, all these manufacturers have obtained BIS certification.
India was self-sufficient in copper cathodes until 2018, when Vedanta’s Tuticorin plant was shut down due to alleged environmental violations.