Run-up to the Union Budget 2002-03: Petrochemicals
Background
The Indian petrochemical sector generates a turnover
of Rs 210 bn and is vital to the economy.
It caters to a wide variety of industries such clothing,
housing, transportation, communications, healthcare etc.
The average plant size in India are still lower than
those in Europe and US even though the country can boast of having world class
plants especially those of Reliance Industries Ltd.
As per India’s commitment to the World Trade Organisation
(WTO), it is necessary to reduce import duties on polymers to 20% by FY05.
Import duties on polymers are therefore expected to come down from current
levels of 35%.
Plastic, Polyester, Synthetic Fibres,
Rubber, Detergents, Solvents etc.
Major announcements in previous year's
budget
Customs duty on polyester chips and nylon chips
was reduced from 35% to 25% while on DMT, PTA, MEG and caprolactum, duties were
reduced from 25% to 20%.
Industry's demands from Union Budget
2002-03
Major demands by industry associations
such as the Indian Chemical Manufacturers Association (ICMA), All India Plastic
Manufacturers Association (AIPMA) and the Confederation of Indian Industry (CII)
are as follows:
Customs duty on building blocks viz. styrene,
ethylene dichloride and vinyl chloride monomer needs to be reduced as domestic
production is inadequate to meet demand.
Customs duty on raw materials used as manufacturing
catalysts should be reduced from 35% to 25%, while that on polymers should
be reduced to 20%.
Special tax concessions under Section 10A and
10B (for availing benefits for a period of 10 years) should be granted from
the date of commencement of commercial production.
Key Players
Reliance Industries, Indian Petrochemicals
Corporation Ltd (IPCL), National Organic Chemical Industries Ltd (NOCIL), Finolex
Industries, Supreme Industries.
