Based on the recommendations of the Kelkar Task, the Budget for 2005-06 is likely to be a package of tax sops for the petrochemical ndustry. A major proposal, now being examined by the finance ministry, seeks to halve the Customs duty on naphtha to 5%. At present, the Customs duty on naphtha used by the polymer and polystyrene industries is 5%, while it is 10% when used by other industries.
The chemicals and petrochemicals department has also proposed halving the Customs duty on ethane, propane and butane to 5% as these are feedstock used in gas cracker complexes. Though no change in the Customs duty on polymers has been proposed by the petrochemicals department, halving of excise duty to 8% has been recommended to boost demand and generate investment of Rs 70,000-80,000 crore in the sector.