5% import duty on naphtha and 6% cut in excise duty on polymers likely in India

14-Jul-08

The Indian ministry of chemicals and petrochemicals has requested the industry bodies representing plastic manufacturing sector to provide them with the facts relating to demand, consumption, availability and revenue, thereby enabling them to forward the proposed changes in import duty, excise duty and customs duty on essential petrochemicals to the finance ministry. This event is a result of the increase in polymer prices five times since May due to ever increasing crude prices leading to the rising prices of the downstream products. The government is considering 5% import duty cut on naphtha and 8% to 14 % excise duty reduction on all plastic products and polymers. The government is unlikely to impose export duty on polymers, or lower the customs duty on polymers from the current 5%. Writing off the 5% import duty on naphtha-a raw material to produce ethylene, propylene, and butadiene in addition to various plastics-will have a positive impact on all the downstream products. The reduction in excise duty on polymers - linear low density polyethylene (LLDPE), low density polyethylene (LDPE), polypropylene and polystyrene - will surely benefit the manufacturers of all user industry. Once the above changes are realized, the beneficiaries will not only be the small plastic processing units but also the large polymer producers like Reliance Industries, India Glycols, BASF Styrenics, Gail and Haldia Petrochemicals.