India Copper Scrap Reform: ICA Demands 5% GST Cut
The International Copper Association India has urged the government to formalize the domestic copper recycling industry. This strategic shift aims to immediately boost the availability of high-grade copper, a crucial transition metal essential for the country’s energy transition, construction projects, and advanced manufacturing sectors.
Key Highlights
- ICA India demands a reduction in the copper scrap GST rate from 18% to 5% to curb tax evasion.
- Nearly 60% to 70% of India’s 600,000 tonnes of domestic copper scrap is currently traded informally via cash.
- Major industrial conglomerates are investing in recycling units but face severe raw material shortages.
- Transitioning to advanced secondary smelting will allow factories to produce high-grade cathodes from scrap.
Leading domestic industrial conglomerates are already deploying capital to set up advanced recycling facilities across the country. However, these companies face severe raw material shortages because the domestic scrap trade remains highly fragmented and unorganized.
The incoming investments face policy headwinds as the current fiscal framework remains unfavorable for scrap copper processors. Dropping the indirect tax rate will systematically drive the formalization of the sector by eliminating tax evasion and lowering financing costs for domestic smelters and refiners. India generates approximately 600,000 tonnes of local copper scrap annually, but 60% to 70% of this volume circulates through cash-based informal channels. Consequently, the quality of this recycled metal falls short of refined primary copper standards, highlighting the need for responsible, technology-driven recycling over basic re-melting.
Expanding secondary smelting and refining infrastructure using advanced technology will enable the domestic industry to manufacture standard-grade cathodes directly from scrap. This shift will eliminate substandard cash-based re-melting operations, which currently pose significant safety and performance risks for electrical applications.
The industry body is actively lobbying to slash the GST on copper and related articles from 18% to 5%. This fiscal adjustment aims to bring transparency to the supply chain and significantly boost tax compliance.
India’s aggregate annual demand for the metal has reached approximately 1.8 million tonnes. Local scrap represents a remarkably high proportion of the total supply matrix compared to global averages, consisting of 600,000 tonnes of domestic scrap supplemented by 200,000 tonnes of imported scrap.
Future Outlook
As India targets net-zero goals, the demand for clean energy infrastructure will heavily rely on efficient base metal supply chains. Transforming the secondary copper market from a cash-driven network into an organized manufacturing ecosystem could secure up to 44% of India’s current metal requirements internally. If the government aligns the tax structure with industry demands, private players are expected to scale up secondary refining capacities rapidly. This shift will reduce dependence on import channels and establish a sustainable, circular economy for critical electronic and industrial manufacturing.
FAQs
What is the current GST rate on copper scrap in India?
The current GST rate on copper scrap stands at 18%. Industry bodies like ICA India are actively lobbying the government to reduce this rate to 5% to improve compliance and eliminate informal cash trading.
How much copper scrap does India generate and consume annually?
India generates around 600,000 tonnes of domestic copper scrap annually and imports an additional 200,000 tonnes. This combined scrap pool helps satisfy a total national copper demand of roughly 1.8 million tonnes.
Why is the informal trading of copper scrap a problem?
Roughly 60% to 70% of India’s copper scrap is traded via cash in the informal sector. This results in poor quality re-melted copper that fails to meet the safety and performance standards required for electrical and industrial applications.
