Budget 2012: Reduce duty for major chemicals and fertilizers, says FICCI

The adverse tariff regime is one of the primary reasons for inadequate investment and growth in this core sector in India.

By Agencies | Updated: Feb 16, 2012, 07.07 PM IST

NEW DELHI: Petrochemical industry is highly capital and energy intensive. The adverse tariff regime is one of the primary reasons for inadequate investment and growth in this core sector in India.

Rapidly developing countries such as China provide 5.5% tariff differential between Naphtha and Polymers. This has provided adequate incentive for global majors as well as local entrepreneurs to invest in petrochemical plants. Government may consider following duty structure:

• Naphtha (2710 1190) : from 5% to NIL %

• Propane (2711 1200) : from 5% to NIL %

• Butanes (2711 1300) : from 5% to NIL%

• LNG (2711 1100) : from 5% to NIL %

• Ethylene (2901 2100) : from 5% to NIL %

• Propylene (2901 2200) : from 5% to NIL %

• Crude C4’s (2711 1900) : from 5% to NIL %

• Aromatics Feed stock (2707 9900): from 10% to NIL%

• EDC (2903 1500) : from 2% to NIL %

• VCM (2903 2100) : from 2% to NIL %

• Paraxylene (2902 4300) : from Nil % to 2 %

Also to extend the contents of the Notification 54/2011-Customs dated 1st July'11 for all polymer producers who use Naphtha as their primary feed.

The basic feed-stock for petrochemicals like naphtha and natural gas may be included in list of declared goods so as to remove differential and often excessive state levies on these primary inputs to the sector.

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