Copper exporters for removal of value norms

VADODARA: Copper exporters in the country have teamed up against the existing value-addition norm and have sought a change in the exim policy.

The industry imports raw copper and exports finished products. As per the norm fixed by the ministry of commerce, unless the exporters achieve 15% value addition, they cannot import material of the same value for their exports. Simply put, exporters cannot import goods worth more than Rs 85 if their exports are worth Rs 100. But, if there is value addition in the finished products, they can import raw material up to Rs 100, a value equal to their exports.

Faced with rising prices of raw copper in the international market, exporters are finding it tough to meet 15% value-addition norm. Dealing in copper winding wires, enamelled wires, busbar wires and other products, they say they are unable to achieve value addition and are hence unable to import in the desired quantities. Subsequently, there is a loss of big chunk of revenues. Earlier on August 27, 2009, the government had issued notification to encourage value addition in manufactured exports and had stipulated a minimum 15% value addition on imported inputs under advance authorisation scheme.

The players say that 98% of the final product is copper. For such high percentage, value addition is difficult to incorporate. Now the Winding Wires Manufacturers’ Association of India (WWMA) has made a representation before the ministry of commerce and DGFT, asking the agency to restore the old norm that existed in the exim policy 2004-09.

WWMA chairman Shreegopal Kabra told “India exports around 3 lakh tonne of copper (which includes raw copper). This could be worth over $210 million. The rise in prices of copper in both the domestic and international arena has led to a disruption in the businesses of WWMA members. In December 2008, the average London Metal Exchange copper rate was $3,072 and it has been continuously rising thereafter. It crossed $6,982 in December 2009, which is nothing less than a 120% rise in the prices of raw material.”

“When the prices were around $3,072, exporters could make a value addition of 24% between December 2008 and January 2009 in enamelled copper winding wires. But now with the prices at $7,500, only 10% of value addition is feasible,” said Mr Kabra, adding that exporters are losing around $60-80 a tonne as they have to purchase the raw material from local sources by paying a hefty duty.

The Federation of Association of Small Industries of India (FASII) president and owner of Vidya Wires S S Rathi said, “It is high time that government supports the exporters as its takes years to develop the export market. Unfavourable policy change will take a heavy toll on the strenuous efforts put by one and all including government agencies to develop this market.”

Mr Kabra feels, “Copper wire sector must be given relaxation in line with that given to the gems and jewellery sector.” Among the 27 organised winding wire producers, Birla Copper and Sterlite Industries are the biggest exporters from India. The size of the domestic virgin copper market could be around 7 lakh tonne, of which 3 lakh tonne is being exported, Mr Kabra added.