In Coimbatore, one of the main MSME clusters in the country, price of copper has shot up by almost 75% in the past one year. One kg of copper now costs ₹1,450 as against ₹800-₹900 a kg last year.

The prices had touched ₹1,500 a kg earlier in the year and softened only recently.

With MSMEs in Coimbatore manufacturing automobile components, electric vehicles, pumps, renewable energy components, electronic parts, and so on, the high price of copper is eroding the competitiveness of the engineering industries.

The U.S. and China are the major consumers of copper globally, and India imports almost all its requirements. In the recent months, use of recycled copper is on the rise because of the prices, said industry sources here.

V. Rangaswamy, president of the Coimbatore District Small Industries Association, said if the price hike was less than 10%, the units would have absorbed it fully. With over 60% increase, however, the MSMEs were able to pass on [to the customers] just 10%-15% of the rise in copper prices. Along with it, prices of steel and zinc have also gone up.

“MSMEs fix the pries once in a year or once in two years. Hence, they are unable to pass on the hike fully to the customers. Further, it is not just the price of copper. Cost of all petroleum-based products have also seen a hike. These have eroded the competitiveness of the MSMEs,” he said.

Schemes such as raw material banks were not helpful in these situations as copper was precious and could not be stored in bulk, he added. “Copper is like gold now. Even if a small quantity is lost, the MSMEs will stand to lose,” he said.

Jayakumar Ramadas of Mahendra Pumps said use of copper coated wires is becoming common in many pumpsets manufacturing units. “We tell our customers whether the wires used are copper or copper coated and have priced the pumps accordingly,” he said. According to him technology will evolve gradually around use of copper-coated products for industrial use.