The use of non-ferrous metals in the manufacturing industry, to boost growth sustainably and economically, cannot be undermined. Almost all industrial sectors require metals like zinc, lead, copper, aluminium, and silver due to their unique properties and characteristics that help meet resource and energy efficiency goals.
I would like to see more expenditure on the infrastructure where India can benchmark with global standards. Also, with the government’s agenda to have more and more zinc galvanised railway line laying, it will help us protect the railway lines for the next 50 to 100 years. In India, 15% of the railway lines are changed every year because of corrosion.
Traditionally, exploration rights for mining reside with the government. These rights should be opened up in a way that private companies can freely pick an area, define the block and seek permission for exploration rather than government defining the block.
All exploration and mining policies of India encourage mining of surficial minerals like bauxite, iron ore, limestone, coal, etc., whereas India imports over $100 billion minerals including coal and 75% of them consist of deep-seated, strategic and precious mineral and metals like gold, copper, zinc, nickel, rare earth elements, etc. We need favourable policies that support the exploration and mining of such minerals.
Furthermore, we are hopeful to see the government’s plan on spending money to increase the production of coal domestically so that dependence on imported coal is reduced.
Reforms needed for Zinc mining
India produces approximately 700 kilotonnes (KT) zinc, while the domestic market size is approximately 650 KT. We still import around 20-23% of zinc and a similar quantity of the metal is exported due to this. Free trade agreements with countries like Korea or Japan help exporters to send zinc to India on nil-duty basis. This is killing domestic industries and is not conducive to our vision of Make in India.
There is a need to review such FTAs and prevent nil-duty imports to increase basic custom duty of zinc from 5% to 7.5%.
Increasing the duty on import of zinc scrap and strengthening physical examination at the Indian port of discharge to prevent the entry of mixed zinc scrap into the country can go a long way in boosting the indigenous industry.
Reforms needed in lead mining
Lead is primarily used for energy storage purposes, like batteries. Growth of the auto and solar industry has raised the demand for lead in India. India can produce 2.5 lakh metric tonnes (MT) of primary refined lead and over 10 lakh MT of refined lead through recycled route. However, the lack of proper channels for the latter leads to the easy import of lead from various FTA countries. This calls for tightening the import route and increasing the duty for lead to 7.5% and for lead scrap to 10% for restricting imports.
We need a strong policy to check adherence to the environmental norms of these recyclers.
Potential for silver mining connected to other domestic sectors
Industrial use like electronics and solar applications is the key growth driver for silver consumption in India and abroad. Silver is also used for jewellery and investment purposes. India is the sixth-largest silver producer in the world with LBMA accreditation, but Indian banks are now allowed to source silver from domestic producers.
The freedom to procure silver from domestic silver manufacturers instead of importing the precious metal as bars from other countries can help boost domestic production. Apart from this, the government has introduced Section 115BAB of the Income-tax Act to boost India’s economic growth. According to the ruling, a domestic company engaged in the business of manufacturing and production of silver has the option to pay tax at the rate of 15%, subject to fulfilment of prescribed conditions, one such condition being is that the production should start on or before March 31, 2023.
Granting an extension from March 2023 to March 2025 will give manufacturing companies the time they need to navigate set-up amid supply chain disruptions, labour mobility, spending slowdown and jitters over credit markets due to the pandemic.
Overall, it would help if the grant of pending exploration licenses and mining leases are fast-tracked, and the central and state governments come together in the effort to promote mining activity in the country. The upcoming Budget comes with hope despite the threat from a new Covid-19 variant, the government will take an inclusive approach, one that is rooted in foresight and concern for the domestic market.