India's primary copper producers are asking the government to cut GST on copper from 18% to 5%. With copper at record highs, they say the tax now ties up as much as $3.6 billion of working capital.
At a glance
- The Indian Primary Copper Producers Association is in talks with the government to lower GST on a range of copper products to 5%.
- The group says the cut could free up to $3.6 billion now locked in upfront tax payments.
- Cable makers and dealers have cut copper inventories so far that stocks are now counted in days, not weeks.
Background
GST, India's goods and services tax, is charged as a percentage of a product's value. Copper currently attracts 18%. Because the tax scales with price, every rise in copper lifts the cash a buyer must hand over upfront. India has also leaned heavily on copper imports since Vedanta's Sterlite smelter shut in 2018.
What happened
The Indian Primary Copper Producers Association wants GST on a range of copper products cut from 18% to 5%. Its president, Rohit Pathak, said on Wednesday, September 23, that the group is in talks with the government. He put the potential benefit at up to $3.6 billion of working capital released from tax payments.
The tax is paid upfront at two points in the chain. Primary producers pay it when they buy feedstock for processing, and downstream manufacturers pay it again when they buy copper products.
Why record prices make it worse
Copper has set a series of record highs this year and climbed above $14,700 a tonne on the London Metal Exchange (LME) in September. An 18% tax on a much more expensive metal means far more cash tied up at every step. The high tax "is locking up significant working capital that could otherwise be deployed toward industry expansion," Pathak said.
The strain reaches the biggest producers. Pathak said Hindalco Industries, which runs on a roughly three-month concentrate cycle, is feeling the higher working-capital needs. The request also comes as the domestic copper industry is in the middle of a multibillion-dollar investment push.
What it means for India
Buyers are already adjusting. Cable makers and dealers have sharply reduced their copper inventories because stockpiling has become so expensive, and stocks are now measured in days rather than weeks, according to Pathak.
Days later, India's aluminium extruders made a similar plea, asking for the 7.5% duty on primary aluminium to be scrapped. For copper, any change to the rate would have to go through the GST Council, which sets GST rates.
Our read
Outlook: neutral. A domestic tax change would ease cash pressure on Indian producers and buyers but would not move global copper supply or LME prices. It could support Indian demand at the margin by making it cheaper to hold stock.
What to watch
- Whether copper appears on the agenda of the next GST Council meeting.
- LME copper prices, since every new record raises the cash an 18% tax ties up.
- Inventory levels at Indian cable makers and dealers, which show how hard the working-capital squeeze is biting.
For information only, not investment advice.
Copper price in India
metalscost.com India reference price as of 2026-10-03.
Detailed analysis
Timeline
- 2026-09-23: Indian Primary Copper Producers Association president Rohit Pathak says the group is seeking a GST cut on copper to 5% from 18%.
Demand Drivers
Indian cable makers and dealers have cut copper inventories to days rather than weeks because holding stock at record prices has become costly.
Government Policies
The producers' association is in talks with the government to cut GST on a range of copper products from 18% to 5%.
Global Consumption
Copper has hit a series of records this year, rising above $14,700 a tonne on the LME in September.
What could lift prices
- A GST cut would make it cheaper for Indian buyers to hold copper, which could support restocking.
- India's copper industry is in the middle of a multibillion-dollar investment push that needs more metal.
What could weigh on prices
- Cable makers and dealers are running inventories down to days, which trims near-term buying.
- Record LME prices are already straining working capital across India's copper supply chain.
Country impact
| Country | Impact | Reason |
|---|---|---|
| India | Medium | Producers and downstream buyers say up to $3.6 billion of working capital is tied up in upfront GST on copper. |
Industry impact
| Industry | Effect | Reason |
|---|---|---|
| Copper Smelting & Refining | Negative | Primary producers such as Hindalco carry heavier working-capital needs as prices climb. |
| Wire and Cable Manufacturing | Negative | Cable makers are cutting inventories to days because stockpiling has become so costly. |
Who gains, who loses
- Primary copper producers: A cut to 5% would release cash they say could fund expansion instead of sitting in tax payments.
- Cable makers and copper dealers: They face the highest cost of holding stock while the 18% rate and record prices both stay in place.
Other ways this could play out
- If the GST Council approves 5%, buyers could rebuild inventories that are now down to days.
- If the rate stays at 18% and copper keeps setting records, the working-capital squeeze would deepen.
Price risks
- A sharp fall in LME copper would ease the squeeze on its own, weakening the case for a tax cut.
- A sudden restocking wave after a tax cut could briefly lift Indian copper premiums.
Historical comparison
- 2018: Vedanta's Sterlite copper smelter shut, leaving India heavily reliant on copper imports ever since.
Technical view
Price is mixed relative to its 20-period and 50-period moving averages, showing no clear trend alignment.
Computed from metalscost.com's own stored price history.
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