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Indian chemical industry has an output of around USD 80 billion and ranks 12th in the world. The chemical industry which includes basic chemicals and its products, petrochemicals fertilizers, paints and varnishes gases soaps, perfumes and toiletries and pharmaceuticals is one of the most diversified of all industrial sectors covering thousands of commercial products.
It forms the backbone of the industrial and agriculture development of India and provides building blocks for downstream industries. It contributes about 3 per cent in the GDP of the country.
The chemicals and petrochemicals sector in India presently constitutes 14 per cent of the domestic industrial activity.
Industry Expectation
- Elimination of customs duty on alcohol for production of chemicals. Duty on alcohol was brought down from 10 per cent to 6 per cent to support Government's fuel blending initiative. Since alcohol is derived from renewable sources, to promote green chemistry, it is desirable to eliminate customs duty on this important feedstock for the chemical industry.
- Elimination of customs duty on Liquefied Natural Gas. Liquefied Natural Gas (LNG) is a major input both as energy source as well as feedstock for fertilizers and for petrochemicals. While duty on crude has been reduced to 0 per cent, LNG continues to attract 5 per cent duty. Due to its significant potential for value addition, duty on LNG needs to be brought down to zero level.
- Elimination of customs duty on basic petrochemical feedstock like Naphtha. At present duty on Naphtha is at 5 per cent. Duty on naphtha for production of fertilizer is already at zero level. Through a recent notification has also exempted import duty on naphtha for Haldia Petrochemicals. This needs to be made uniform for all users of naphtha for petrochemical production. Current duty on Naphtha has also resulted in duty inversion, particularly with respect to Singapore where due to FTA; duty on polymer is 2.8 per cent.
- Elimination of customs duty on basic petrochemical feedstock like Saturated cyclic Hydrocarbon Ethane, Propane and Butanes. These gases also attract basic custom duty of 5 per cent. Since these are also basic feedstock for petrochemicals, duty on these also need to be brought down to zero.
- Elimination of Customs duty on Aromatics Feedstock. Aromatic Feed Stock is used for production of Benzene, Ortho-xylene, Paraxylene and Toluene. Duty on this is 10 per cent whereas duty on main product made out of Aromatic Feedstock, Paraxylene is at zero level resulting in a major case of inverted duty.
- Elimination of Custom Duty on Crude C4's. Crude C4's is used for the manufacture of Butadiene and attracts 5