India’s top metals trade associations have dragged the Centre to court over its quality control order (QCO) on copper cathode, alleging the QCO was not issued in public interest and has caused “acute shortages” in supply, The Indian Express has learnt.
Copper cathode imports recorded a sharp decline in December and January, after the QCO notified by the Ministry of Mines came into effect on December 1, 2024.
The dip in imports followed delays in foreign suppliers securing quality certification from the Bureau of Indian Standards (BIS), without which their cathode shipments cannot be imported into India.
Legal challenge against QCO
The petition, filed on March 18 by the Bombay Metal Exchange and the Bombay Non-ferrous Metals Association, urges the Bombay High Court to “quash” the QCO for the “survival” of downstream users.
With insufficient domestic production, India relies on imports for roughly 30 per cent of its refined copper needs – a key raw material for wires, sheets, and tubes.
In India, copper is classified as a critical mineral given limited domestic production and high demand in conventional and emerging technologies – from air conditioners and transformers to electric vehicle (EV) batteries and wind turbines. It is also seen as a bellwether of economic activity due to its extensive application.
The petition was heard by a bench of the Bombay HC on March 27 and is yet to be admitted. It is listed for another hearing on April 17. Till then, the mines ministry and the Ministry of Consumer Affairs – under which the BIS falls – are expected to file an affidavit in reply as respondents to the petition.
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The mines ministry and the consumer affairs ministry did not respond to requests for comment.
Steep decline in imports
After averaging 27,000 tonnes per month between April and November 2024, copper cathode imports fell below 4,000 tonnes in December and plunged further to just 611 tonnes in January. Compared to January 2024, this marked a 95 per cent decline, official trade data showed.
The petition describes the QCO as a non-tariff trade barrier that “arbitrarily restricts the trade flow of copper”.
According to official sources, there was a spike in imports in November, which downstream users stocked for later months. This, they said, meant there was no shortage in December and January. Trade data for February and March will give a clearer indication of whether any shortage has occurred, the sources added.
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On December 6, days after the QCO came into effect, The Indian Express had reported that downstream users had warned the mines ministry of a 90-day shortage and requested that its implementation be delayed by four months.
Japan accounts for nearly 70 per cent of India’s refined copper imports, followed by Tanzania and Mozambique.
BIS clears more suppliers, compliance hurdles remain
Following the Express report, the mines ministry issued a press release stating that “no serious supply side constraint is envisaged,” as it expected more Japanese suppliers to receive BIS certification. At the time, only two Japanese suppliers had been certified.
As of April 15, a total of nine foreign suppliers have been certified under the BIS’s copper cathode standard covered by the QCO – including six from Japan, two from Malaysia, and one from Austria.
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Despite some foreign suppliers obtaining BIS certification, downstream users say the compliance burden remains high for most exporters – a factor that continues to deter imports into India.
As per official sources, since Japanese suppliers now have licences, imports are not being blocked. They said the BIS standard for copper cathode is more scientific than the London Metal Exchange (LME) standard, which does not require a resistivity test to ensure quality. India, they added, will achieve self-sufficiency in refined copper by October, after which imports will not be needed.
Concerns about market concentration
Only four domestic producers are currently BIS-certified to supply copper cathode in India, including Hindalco Ltd, Vedanta Ltd, and Adani’s Kutch Copper Ltd. With Adani’s first copper smelter expected to ramp up capacity in the coming weeks, domestic supply is set to rise.
However, the petition argues that “imminent demand (global and national) and the corresponding scarcity will far outstrip the forecasted numbers of ramped up copper production and processing”.
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Adding to the squeeze, domestic producers set aside a large portion of copper cathode for captive use, leaving limited raw material available for non-integrated downstream players.
The petition also urges the court to quash the QCO to “avoid creation of a monopoly and subsequent price escalation,” warning that domestic producers could “charge exorbitant and irrational rates” as imports decline.
QCO implemented after extensions, supply concerns
The mines ministry notified the QCO on August 31, 2023, originally set to take effect three months later, to restrict the import of substandard refined copper.
However, after industry stakeholders highlighted that obtaining BIS certification for foreign producers typically takes 8-12 months, the ministry extended the implementation by six months. In May 2024, it extended the QCO by another six months, effective December 1, as none of the Japanese producers had secured BIS certification.
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In the same month, export-oriented units were exempted from all QCOs notified by the mines ministry, offering some relief to the industry. However, the bulk of India’s copper consumption targets the domestic market, which includes various medium and small enterprises.
In a file noting from May 2024, a senior official had warned that without an extension, “supply rigidity” in copper cathode could impact industrial users such as electrical and winding wire manufacturers, according to documents reviewed by The Indian Express.
