Chemical sector wants reclassification of duty

NEW DELHI: The Indian chemical industry is one of the sectors that have been hit by the inverted-duty structure. The Indian Chemical Council has expressed concern over the matter, and has approached the ministry of chemicals for duty structure reclassification.

“The duty on most of the chemicals has been brought down from 12.5% to 7.5%, while the duty on most of the building blocks for these chemicals continues to be at 5% making the differential 2.5% as against 7.5%. The duty rates for fuel oil, which is the raw material for the chemical industry, is 10% and is higher than the new rate for chemicals, which are finished products,“ said Indian Chemical Council president Dipankar Dutta Gupta.

The council is requesting the government to place all the chemicals that attracted a peak customs duty back in the peak list to attract 10% duty. “In case this is not possible, then we have requested the ministry of chemicals to reduce the duty on all building blocks from 5% to 2%,” said Mr Gupta.

According to the council, there is a lot of pressure from China and the Middle East and the poor infrastructure and new duty structure are making it difficult for industry players to compete in the global market. In regions like China or the Middle East, the power cost is low and the quality of power is good, thus putting them ahead in the race.

Another major concerns of the council was Registration, Evaluation, Authorisation of Chemicals (REACH), a regulation adopted by the European Union to protect the human health and environment. “This is a non-tariff barrier that will bar any company from exporting to EU in case it fails on the parameters laid out by the EU,” said a member and past president of the Indian Chemical Council, SN Singh. The government is not setting up a help desk at the Indian Chemical Council to help SME in dealing with the REACH.