INTERVIEW-UPDATE 1-India copper demand to slow as economy drags

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By Biman Mukherji

NEW DELHI, Sept 10 (Reuters) - Growth in India's copper demand is expected to nearly half to 8-9 percent this fiscal year as a slowing economy and higher interest rates drag, the India head of an international trade body said on Wednesday.

Ajit Advani, chief executive of the International Copper Promotion Council's India office, told Reuters expansion had averaged 15 percent over the past two years, fuelled by a housing boom, strong industrial growth and higher consumer spending.

But with signs of a slowdown in the economy and interest rates at seven-year highs, momentum could slow in key sectors like housing construction and household appliances.

"The consumption of copper-based appliances in the white goods segment -- such as refrigerators, air conditioners -- will slow down due to a reduced rate of growth of disposable incomes. This will also have a dampener on copper consumption," Advani said in a telephone interview.

India's copper consumption was estimated at about 512,000 tonnes last year, with power generation, distribution and transmission into homes accounting for the majority.

"The impact on residential construction would come from high prices and higher interest rates on home loans. The impact on commercial construction would come from the slowing down of growth of IT and IT-enabled services," Advani said.

Bank interest rates on home loans have shot up to more than 12 percent from 7.5 percent in the last two years as the central bank raised key lending rates to help cool rising inflation, pinching demand for new homes.