Rising UAE Copper Rod Imports Under CEPA Threaten Domestic Manufacturing Growth

The Indian Primary Copper Producers Association (IPCPA) has alerted the commerce ministry to a sharp rise in copper rod imports from the United Arab Emirates (UAE) under the India-UAE Comprehensive Economic Partnership Agreement (CEPA), arguing that the trend endangers billions in domestic investments. Major producers, including Hindustan Copper Ltd, Hindalco Industries, Vedanta Ltd, and Adani Group's Kutch Copper Ltd, have developed a refined copper capacity of 1.25 million tonnes since 1996, exceeding the projected FY25 demand of 850,000 tonnes. The industry, eyeing further expansions over the next decade, views CEPA's lenient rules as a barrier to growth, potentially flooding the market with minimally processed imports.

CEPA, effective since May 2022, aims to boost bilateral trade but has drawn scrutiny for enabling UAE exports of copper rods with little genuine value addition. The UAE lacks domestic copper mining, smelting, or refining facilities, relying instead on imported cathodes—often from Chinese-controlled supply chains—that are simply melted, cast, and rolled into rods. This process changes the tariff classification but adds negligible economic value, according to IPCPA.

While imports stayed modest in FY23 and FY24 due to phased duty reductions, the tariff on copper rods dropped from 2% to 1% in May 2025 and will reach zero by May 2026. Consequently, UAE-sourced copper rod imports nearly doubled to 86,060 tonnes in FY25 from 43,450 tonnes in FY24, with non-advance authorisation shipments jumping 239% to 63,890 tonnes. In the first four months of FY26, imports already reached 42,710 tonnes—half of FY25's total—signalling an impending flood once duties vanish.

The association highlighted parallels with other free trade agreements (FTAs), such as India-ASEAN and India-Japan, where zero duties on finished goods led to import surges and deterred local investments. IPCPA also decried the 85,000-tonne tariff rate quota (TRQ) for copper rods as excessively high and ineffective in shielding producers, especially given the UAE's minimal processing. "The current Product-Specific Rule (PSR) under CEPA is allowing minimally processed goods to enter India duty-free, undermining the domestic copper industry's long-term viability," the letter stated. With global copper demand rising due to electrification and renewable energy transitions, India's self-reliance efforts could falter if unchecked imports erode market share for local refiners.

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To counter these threats, IPCPA proposed revising CEPA's PSR by removing "melt, cast, and rolled" provisions and mandating that non-originating materials fall under different tariff subheadings. It also recommended a minimum 40% value addition requirement and slashing the TRQ to 20,000 tonnes annually. These changes, the group argued, would ensure fair competition and protect strategic investments in a sector vital to India's manufacturing and green energy goals. The commerce ministry has yet to respond, but the issue underscores broader debates on balancing trade liberalisation with industrial safeguards amid India's push for $5 trillion economy status.

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