Even as the Tuticorin protests turn violent and take a political colour in Tamil Nadu, here’s a look at the significance of copper for the Indian economy.
New Delhi: As the protests against Vedanta’s Sterlite Copper unit intensified, eleven people have died so far in Tuticorin after Tamil Nadu police opened fire at protestors. Since 12 February, locals have been protesting against the operation of the copper smelter over pollution concerns. Post yesterday’s firing, the Tamil Nadu government has constituted an inquiry commission to probe the incident.
The Sterlite Copper plant was in operation for 20 years but was ordered to close down in 2013 following a gas leak, according to a government statement Tuesday. The National Green Tribunal later overturned the government order. An appeal against the NGT order is currently pending before the Supreme Court. Meanwhile, the Madras high court Wednesday issued a stay order on the expansion of Sterlite Industries plant.
Even as the protests turn violent and take a political colour, we take a look at the significance of the metal for the Indian economy.
Importance of copper
Copper, an important metal, is crucial for the growth and infrastructural development of India. With the government shifting its focus on developing smart cities and rapid urbanization and infrastructure, the rate of consumption of copper is also expected to increase.
According to a report by ratings agency Icra this year, India may become a net importer of copper by the end of FY20 if current growth rate persists. An earlier 2015 Hindalco report stated that India is expected to be the 6th largest copper market by 2020 with major consumption sectors being – electrical, transport and telecommunications.
The metal is majorly used for making electronic vehicles (EV) which have the potential use of copper in their lithium ion batteries, power inverters, among others.
In recent years, the metal has started significantly replacing aluminium conductors. Copper is less brittle, more flexible and does not erode easily, but comes at a higher cost than that of aluminium.
Copper’s value for India
According to the Directorate General of Commercial Intelligence and Statistic, ministry of commerce and industry, the total export value of copper in India stood at $5,734.22 million between FY17 and FY18. The highest export demand came from China that stood at $2,143.85 million.
Copper is an important export commodity for India in maintaining trade relations with its north-eastern neighbours with exports worth approximately $2,785.84 million during the period.
In terms of imports, India bought $1,604.79 million worth copper products in the first two months of 2018 alone.
Copper consumption
India is also one of the leading consumers of copper. According to the ministry of mines, a major share of India’s copper consumption is at 36 per cent for electrical and telecommunication sectors followed by transport and construction at 11 and 8 per cent respectively.
According to Centre for Monitoring Indian Economy estimates, consumption of refined copper in the Indian economy recorded compound annual growth rate of 2.51% from FY13 to FY17. The proposed affordable housing project by the new government is understood to be a major driver of consumption for copper in the construction sector.
Moreover, the telecom industry is adopting to the use of optic fibre cables which use copper in their wiring. Defence Production Policy 2011 encourages indigenous manufacture of defense equipment in the private sector.
According to Statista.com, consumption volume of copper across India in the financial year 2017 stood at 0.96 million metric tonne. The figure is estimated to touch 1.32 million metric tonne by fiscal year 2022.
Future for copper trade
As the Tuticorin incident unfolded, the Madras high court Wednesday issued a stay order on the expansion of Sterlite Industries plant. Although health and environment are major concerns for the country, this episode may have a long term impact on copper trade in the country.