Why doesn't India have copper ETFs?

In today’s episode on 28th March 2026, we talk about copper ETFs and why India doesn’t have them, even though they exist globally. Book a FREE call with Ditto https://ditto.sh/vx51ji

• 0:00Speaker 00

  Hello folks, you're tuned into Fincharts Daily. In today's episode, we talk about copper ETFs and why India doesn't have them even though they exist globally.

• 0:12Speaker 00

  Before we begin, here's a quick word from Team Ditto. Life has a way of surprising us and not always in a good way. Sometimes it's a sudden illness or an unexpected hospital visit that can shake up everything. In India, families still pay about 39% of medical expenses directly from their own pockets and just one hospital stake can wipe out years of savings. The easiest way to protect yourself is by getting a good health insurance plan. It's way cheaper than footing one huge bill. And if you're unaware where to start, book a free call with Ditto. No spam, just honest, jargon-free guidance. Trusted by over 8 lakh people for their health and term insurance needs. The link is in the description. Now, back to the story. Copper is named Dr. Copper for a reason.

• 0:56Speaker 00

  It's known to be a very good barometer of the world's overall economic health because it's used across so many sectors. Construction, manufacturing, automobiles, electrical equipment and now even AI data centers. So, when copper prices go up, it usually means demand is strong and you can tell that people are optimistic about future economic growth. But when prices fall, it can signal a slowdown in the economy. This ability to reflect economic growth or downturn is what gives copper its so-called PhD in economics. Hence, Dr. Copper. But here's the thing. Copper may be a good economist, but it's also a moody one. Because while it reflects the economy, it's also incredibly volatile. And right now, it's behaving exactly like that.

• 1:40Speaker 00

  After reaching an all-time high of $13,000 per metric tonne on the London Metal Exchange in Jan this year, copper has now fallen about 10% since the US-Israel war with Iran began on Feb 28th. At first, this makes sense. War pushes up energy prices, higher energy costs slow down economies and when economies slow, industries cut back. They use less copper, so demand falls and prices follow. But the confusing bit is that the same conflict is also disrupting supply. You see, copper production... Depends on sulfuric acid, which in turn depends on sulfur, much of which moves through the strata formous. With disruptions in that region, the supply chain has taken a hit, which means less copper production and that should push prices up.

• 2:22Speaker 00

  So now you have two forces, demand and supply, pulling the metal in opposite directions. And Dr. Copper, caught in the middle, is doing what it does best. Swinging back and forth, trying to make sense of a world that isn't giving it clear signals. But that isn't stopping investors from looking at copper. Historically, gold was the asset investors rushed in times of uncertainty. And more recently, silver has also attracted significant interest. But now, investors are looking diversified beyond these traditional metals and are turning to alternatives like copper. And falling copper prices may be one reason why investors wanted to print to this opportunity, especially since the metal has rallied about thirty percent of the past year. Sure, that's not as much as gold's eighty percent rally, silver's one fifty-five percent, platinum's one twenty percent,

• 3:04Speaker 00

  or palladium's seventy-five percent of the same period, but it's still sparking interest. Because going ahead, both India and the world could demand copper in quantities that mining and recycling may not be able to supply fast enough. For context, according to a recent NITI Aayog report, India's cumulative demand for copper could exceed twenty million tons by twenty fifty, up from current domestic consumption of nearly one million ton. That's why policymakers are pushing for more investment in domestic mining to reduce import dependence. Now put all of this together and you'll see why copper starts to look attractive. So naturally, you'd expect a simple investment option to exist like a copper ETF, a fund that trades like a stock but tracks copper prices. But here's a catch, India doesn't have one.

• 3:45Speaker 00

  And that might seem surprising because in global markets like the US and Europe, copper ETFs are already a thing. Some track copper prices through futures contracts, like the United States Copper Index Fund. They don't hold physical copper, instead they simply mirror the price of copper traded on major global exchanges, essentially betting on where prices will go. Others invest in copper mining companies, giving indirect exposure to the metal. For example, the Global Ex Copper Miners ETF. These products work because global exchanges like the LME and the Chicago Mercantile Exchange are highly liquid, with large institutions such as banks, hedge funds, and pension funds. Constantly buying and selling. This makes trading smooth and prices more stable. They also benefit from strong infrastructure such as well-developed warehouses and standardized contracts with clear rules for how futures are settled.

• 4:30Speaker 00

  And all of this makes it easier and cheaper to design and run an ETF that tracks copper. In India, however, it's a very different story. Indian commodity ETFs such as gold and silver are largely physically backed, meaning the fund holds actual metal in regulated vaults. And since gold and silver ETFs dominate the commodity ETF space in India, a large share of assets sits in physically backed products. Such ETFs work beautifully because metals like gold are compact and valuable. A small vault can hold a massive amount of wealth. But copper, not so much. It is bulky and relatively low in value per kg. This means that to create a physically backed copper ETF worth, say, a hundred crore rupees, you need hundreds of metric tonnes of metal. That translates into massive warehouses, constant quality checks, insurance and logistics costs.

• 5:14Speaker 00

  Also, copper isn't as stable as gold. It can oxidize, degrade and needs more careful handling. All of this adds to the cost and these costs can aid into investor returns, making copper ETFs less attractive. Not just that, taxes also make things harder. Gold and silver attract a GST of around three percent, but for copper, that's around eighteen percent. Now, you don't pay GST when buying an ETF, but if a copper ETF were physically backed, every purchase and movement of the metal would come with a much higher embedded cost. Over time, that can drag returns or make the ETF less efficient. Which explains why, unlike gold, a physical copper ETF in India becomes economically unviable. But you could argue that if physical storage is difficult, the obvious alternative is a futures-based ETF like the ones that exist globally.

• 5:56Speaker 00

  But here's the issue. India's commodity futures market, especially for copper, is still dominated by short-term traders rather than long-term hedgers or large institutions. This can lead to patchy liquidity and sharper price swings driven by speculation. And regulators don't love that. For an ETF to work well, you need stable, reliable price discovery. Otherwise, investors could end up tracking something that doesn't behave like the real copper market. There's also another problem. Most global copper pricing is tied to international benchmarks like the LME. But Indian regulators have traditionally been cautious about local products relying too heavily on foreign benchmarks. Their concern is that If an ETF in India depends entirely on an overseas benchmark, it could import volatility from abroad. There are also questions around control like what happens if there's a disruption or manipulation in the foreign market.

• 6:40Speaker 00

  That's why gold and silver ETFs in India rely on domestic benchmarks like MCX-based indices or multi-commodity exchange, which are clearly defined and closely monitored. Copper, in contrast, lacks a transparent, semi-recognized domestic spot price that can serve as a reliable benchmark for an ETF. So, you can see why the futures route isn't straightforward. This is precisely why Indian investors are trying to get exposure to copper through various workarounds. To begin with, there are copper mining and metal sector stocks whose fortunes are tied to copper prices. This gives investors equity exposure to the metal, but the drawback is that these stocks can underperform copper prices due to cost overruns, mismanagement, or other company-specific issues. Many mining companies such as Vedanta also produce other metals which can dilute the impact of rising copper prices.

• 7:23Speaker 00

  On the flip side, they can also outperform copper if they manage to expand production during a price rally and may also offer dividend income. Another option is trading copper futures on MCX where investors can take direct exposure to copper prices, but this comes with significant risks. Futures involves large gains and losses along with daily market-to-market adjustments. This means that if copper prices fall sharply, losses are reflected in your account immediately, sometimes within a single day. You may also be required to add more margin quickly, or your broker could square off your position. Combined with copper's high volatility, this makes futures more suitable for active traders and for casual or long-term investors. And finally, there are global copper ETFs. Some overseas investing platforms allow Indian investors to buy global commodity ETFs,

• 8:06Speaker 00

  including copper, either through international brokers or via the liberalized remittance scheme, or LRS, which permits individuals to remit up to $250,000 per financial year, including for investments abroad. But this route comes with its own challenges: exchange rate risk, additional compliance, and higher transaction costs. But none of these are as simple as buying a domestic copper ETF, which makes you ask, is India ready for one? Well, maybe not quite. For a copper ETF to work in India, few things need to fall into place. First, the futures market needs to deepen with more institutional participation and stable pricing. Second, regulators We need to allow smarter structures such as building a strong domestic corporate spot benchmark they trust or formally permitting ETFs to use an international corporate index as their base. Third, taxes and logistics need to become more favorable.

• 8:51Speaker 00

  And finally, there needs to be consistent investor demand. Because at the end of the day, no fund house will launch a product unless it believes there is enough scale. But until that happens, corporate ETFs will remain one of those things that feels like it should exist in India but doesn't, despite having all the makings of a compelling investment story.

• 9:11Speaker 00

  Thank you for listening to today's episode. And if you want to share your feedback or suggestions, do drop us an email to hi@friendshot startup. Until next time.