Rupees 89,992,20,00000: What Sterlite Copper Plant shutdown has cost India in 3 years

The rise of China in the last four decades tells us that a nation’s progress depends on its ability to produce goods and services for its consumption as well as exports. Realising this, the Modi government gave the clarion calls first for Make in India in the first term and Atmanirbhar Bharat in the second term. However, this nationalist approach towards the political economy has not trickled down to the states, resulting in huge losses for India.

The closure of India’s largest copper smelting plant

It has been more than three years since the closure of Sterlite Copper’s Thoothukudi (Tamil Nadu) based copper smelter plant. It was the largest copper plant in India and accounted for 40 per cent (400,000 MT) of the country’s total copper smelting capacity. The plant was closed after China-backed protests by Christian, Maoists, and eco-fascist groups. Despite repeated efforts, the Union government has not succeeded in its reopening, and the Tamil Nadu government under Chief Minister Stalin is not keen on reopening the plant despite demands from workers and the fact that the plant worked for national interest. 

Net Exporter to Net Importer

India was a net exporter of copper till Financial Year 2018 when the Sterlite plant was open. From a net export of more than 3 lakh tonnes in FY18, the country is now importing around 2 lakh tonnes of copper every year. The country earned around 2 billion dollars every year from copper export, but in the last fiscal year, it footed a bill of around 1.2 billion dollars on copper imports. 

With the renewed focus on infrastructure development of the Modi government, copper consumption in the country is growing exponentially, but most of this growing demand is being met through imports.

Rising International Prices

Amid the ongoing commodity boom, the price of copper has skyrocketed in the international markets. In the last one and a half years, the price of copper has appreciated by more than 100 per cent. Considering the copper price since the closure of the plant in early FY 2019, the prices have appreciated by around 125 per cent.

Net Loss due to the closure of Sterlite’s plant

The net loss of foreign exchange due to the closure of Sterlite’s plant in (fiscal year) FY 2021 was around 3 billion dollars and is expected to be around 4 billion dollars in FY 2022. In the last three years, the country has already lost foreign exchange amounting to 8 billion dollars with around 2 billion dollars in FY 2019 and 3 billion dollars each in FY 2020 and FY 2021.

The total loss due to the closure of the plant would reach around 12 billion dollars or 89,992,20,00000 rupees by the end of the ongoing fiscal year.

Job Losses and other repercussions

According to a report by Business Standard, Industry people said that more than 1.2 lakh jobs were lost due to the closure of the plant. The Sterlite plant supported 400 small-scale downstream industries in the electrical, construction, chemical and automobile sectors. These sectors were dependent on the Sterlite unit for the production of copper, sulphuric acid and fluorosilicic acid. Sterlite unit also employed a large number of people and supported the nation’s economy. Many people who were employed with Sterlite Plant are now jobless and struggling to earn their living and are unable to provide sufficiently for their families.

Pakistan and China are directly benefitting

And finally, Pakistan and China are directly benefitting from the closure of the Sterlite copper plant. China was earlier dependent on Indian copper but after the closure, copper export from Pakistan to China increased by around 400 percent in 2019. Pakistan exported copper worth 550 million dollars in 2019, compared to 106 million dollars export in the year 2018. In June 2020, Vedanta Limited Chairman, Anil Agarwal also wrote a letter to Prime Minister Modi urging him to re-open the plant which is in the best interests of the nation. Agarwal pointed out that India has lost over Rs 40,000 crore due to the closure of Sterlite plant with also losing $1.2 billion in foreign exchange. He added, “The closure has led to idling and rusting of precious machinery and materials and loss of revenue to the exchequers of both the Centre and the Government of Tamil Nadu in the form taxes, cess, etc.”

Earlier, Agrawal’s Vedanta Group had told Madras High Court that the anti-Sterlite protest was funded by Chinese companies which ultimately benefitted from the closure of the plant. Aryama Sundaram, the legal counsel for Vedanta Group, had claimed, “These companies promoted and funded the agitations and protests against Sterlite. India’s import bill for copper is $2 billion, the demand was being met by Sterlite earlier.”

The majority of India’s copper exports went to China (75 per cent) and Taiwan (13 per cent). The closure of Sterlite’s plant benefitted Chinese companies which were facing a tough competition from Indian exports. Given the better quality of the Indian product, Chinese consumers preferred Indian copper and this harmed the interest of the Chinese companies.

Conclusion

Had the Dravidian parties not given up on the pressure of Naxal elements, alleged Church mafia, and anti-national protesters who are suspected to be acting on behalf of China, the state of Tamil Nadu was set to be the biggest benefactor of rising copper prices.

The clarion call for Make in India and AtmaNirbhar Bharat would bring no positive result unless the idea seeps down to the state level and every state government sees protection to the industrial and economic activity as its primary role. India would struggle to gain economic advantages if anti-national elements and eco-fascists keep forcing the closure of plants, metro sheds (particularly the Aarey incident) and manufacturing facilities, case-in-point, the Wistron incident. 

To make India economically powerful, the Government of India must not succumb to the anti-national elements and take the responsibility to build a secure and prosperous India. We cannot let China and Pakistan take advantage of our slow judicial system and the freedom to protest against rightful businesses. In the case of Sterlite copper, national interest must come first, and politics should not be allowed.