Industry Odisha Bureau, Sep 24: Record copper prices are straining working capital across India’s metal trade. Indian copper producers want the GST rate cut to 5% from 18%. Their association says this could free up to $3.6 billion.
Copper’s record run is doing more than lifting prices on trading screens. It is locking larger sums of cash inside India’s copper supply chain. Every purchase of feedstock or copper products now demands more money upfront. The Goods and Services Tax charged on those purchases rises with them.
Indian copper producers now want that burden eased. They are seeking a GST cut to 5% from 18%. Their trade body estimates the change could release up to $3.6 billion.
Copper Rally Raises the Cost of Holding Metal
Copper has hit a string of record highs on the London Metal Exchange this year. This month, LME copper climbed above $14,700 a tonne.
For Indian buyers, that price is not an abstract market signal. It sets the cash each company must commit to every transaction. Higher metal prices raise working-capital requirements at every stage.
That includes primary producers buying feedstock for processing. It also includes downstream manufacturers purchasing copper products. Both groups pay GST upfront on these higher-value purchases. The higher the copper price, the larger that upfront tax payment becomes.
Industry Seeks GST Relief From Government
The Indian Primary Copper Producers Association is leading the push. Its president, Rohit Pathak, said on Wednesday that talks with the government are under way.
The association wants the GST rate lowered on a range of copper. The proposed 5% rate remains an industry request. No government decision on the proposal has been reported.
$3.6 Billion Becomes the Capital Argument
Pathak estimates the cut could unlock as much as $3.6 billion. That money, he said, is currently tied up in tax payments.
His case links tax relief to expansion. High tax is “locking up significant working capital,” Pathak said. He argued those funds could otherwise support industry expansion.
India’s domestic copper industry is in a multibillion-dollar investment push, he added. The $3.6 billion estimate is Pathak’s own, not an official calculation.
Working-Capital Pressure Spreads Downstream
The strain is not confined to one link in the chain. Pathak cited Hindalco Industries as one primary producer feeling the pressure.
Hindalco runs on a roughly three-month concentrate cycle, he said. Such cycles show how long capital can stay committed to raw material. Further along, cable makers and dealers face similar cost pressure.
Expensive Copper Drives Leaner Inventories
Their response has been to hold less metal. Indian cable makers and dealers are sharply reducing inventories. Stockpiling copper has become increasingly costly at current prices.
Stocks are now measured in days rather than weeks, Pathak said. Leaner inventory reflects tighter cash management, not a reported copper shortage.
Import Dependence Adds Industry Context
India has leaned heavily on copper imports for several years. That reliance followed the 2018 shutdown of Vedanta’s Sterlite smelter. The global rally is therefore adding to cost pressures across the domestic metals market.
A Policy Question Still Open
The copper GST debate now rests with policymakers. Producers argue lower tax would free cash for expansion. No official response has been reported so far.
For now, record copper prices keep raising capital requirements across the industry. Until a decision emerges, companies must manage costlier metal on existing tax terms.
