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With the new quality control norms coming into effect, India could face a copper shortage, affecting key industries. Japan’s delayed certification could lead to a supply gap that lasts up to three months.

India’s Copper Shortage: The Effect of Quality Control Norms on Imports

Introduction
India’s copper industry is bracing for a potential shortage as new quality control regulations come into effect. The Quality Control Order (QCO), enforced from December 1, 2024, aims to enhance the quality of imported copper but has inadvertently disrupted the supply chain. Japan, which supplies the bulk of India’s copper, is facing delays in obtaining certification, leaving a substantial supply gap that threatens to extend for months.

India’s Copper Dependency on Imports

India’s domestic copper production falls short of meeting the country’s demand, forcing it to rely heavily on imports.

• Import Necessity: India imports around 30-40% of its refined copper, with Japan being the primary supplier.
• Economic Importance: In 2023-24, India imported copper worth ₹16,500 crore from Japan, highlighting the financial significance of these imports.
• Wide Usage: Copper is used in a variety of industries, including electrical, telecommunications, and electronics manufacturing.

Challenges Posed by New Quality Control Norms

The enforcement of the QCO norms has caused a disruption in copper imports, especially from Japan.

1. Certification Delays: Japanese suppliers are still awaiting certification, leading to significant delays in shipments.
2. Risk of Shortage: The downstream industry is bracing for a shortage of copper that could last up to three months.
3. Impact on Manufacturing: Industries dependent on copper, such as electrical manufacturers, are worried about the impact on production timelines.

Domestic Copper Production: A Bottleneck

India’s domestic copper production is inadequate to cover the country’s total copper demand.

• Limited Capacity: Domestic production only meets around 60-70% of India’s copper needs.
• Increasing Demand: The growing demand for copper in sectors like electrical infrastructure and electronics makes India more reliant on imports.
• Long-Term Solutions: Scaling up domestic copper production is a long-term challenge that will not address the immediate supply gap.

Industry Reactions to the Copper Shortage

Industries dependent on copper have expressed concern over the looming shortage and its potential impact.

• Production Delays: Manufacturers of electrical cables and other copper-based products are already experiencing delays.
• Price Hike: With a limited supply of copper, prices are expected to rise, increasing production costs across various industries.
• Appeal for Government Intervention: Industry leaders are calling for quick action to ease the certification process and ensure a steady supply of copper.

Sectoral Impact of Copper Shortage

A prolonged copper shortage will have far-reaching consequences for several sectors.

1. Electrical Manufacturing: The electrical manufacturing sector, particularly those producing cables and power equipment, will face significant delays.
2. Construction and Infrastructure: Copper shortages could delay construction and infrastructure projects, especially those requiring reliable power distribution.
3. Automotive and Electronics: Industries like automotive and electronics, where copper is used in wiring and components, could also experience disruptions.

Government Measures to Tackle Copper Shortage

The Indian government needs to take swift action to avoid a prolonged copper shortage.

• Fast-tracking Certification: The government should expedite the certification process to clear the import backlog.
• Diversification of Sources: India should consider diversifying its copper import sources to mitigate reliance on Japan.
• Domestic Production Initiatives: In the long term, India must focus on boosting domestic copper production.

India faces a potential copper shortage due to the enforcement of new quality control norms and delays in certification from Japanese suppliers. This disruption threatens to affect industries that rely on copper, including electrical manufacturing, infrastructure, and electronics. Government action is essential to resolve the situation and prevent significant supply chain disruptions.