16% excise duty on plastics could get halved

15-Jan-08
The Union Government is considering a proposal to slash the 16% excise duty currently prevalent in India on plastics by half. This move is expected to drive up consumption of plastics in agriculture, packaging, irrigation, geotextiles, healthcare, lifestyle, automobiles and infrastructure, and result in polymer price reduction in several user industries from auto accessories to medical devices. This would achieve the twin objective of fighting inflation as well as increasing the per-capita consumption of plastics outlined in the new petrochemicals policy. The idea is to drive up demand for the Rs 55,000-crore plastics processing industry, which employs 33 lakh people. The finance ministry is considering this recommendation made by the chemicals and fertiliser ministry, but the decision could be influenced by revenue considerations. The government gets revenues to the tune of Rs 7,300 crore from the plastics processing industry. While naphtha attracts nil duty for making polyethelene and polypropylene, the government is considering slashing the 5% Customs duty on naphtah for producing materials other than the two polymers.
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