Indirect taxes stifling growth in petrochemicals
Government recently unveiled National Policy on Petrochemicals that envisages massive investment in the sector. Fresh investments of Rs 84,000 crores are required to be made by 2011-12.
By TNN |
Products made from plastics are used in agriculture, healthcare, infrastructure, household appliances, packaging and house wares. These are used by the masses.
Recognizing the vital role that the industry plays in the overall growth and economical development of the country, government recently unveiled National Policy on Petrochemicals that envisages massive investment in the sector. Fresh investments of Rs 84,000 crores are required to be made by 2011-12.
High incidence of indirect taxes on plastic products in India, currently over 30% (excise duty + VAT), is stifling demand. The rate is the highest in Asia Pacific region. China has indirect taxes of only 17%.
Existing 16% excise duty is too high for products required by the core sectors. There is strong rationale to reduce this to spur growth and tame inflationary pressure on Indian economy.
High import duty on key inputs makes Indian manufacturers uncompetitive. Import tariff on key petrochemical inputs like Propane, Naphtha for production of petrochemicals, octene, butene-1, capital goods, catalysts and chemicals needs to be completely eliminated.
To ensure adequate duty differential between end products and building blocks, import duty on ethylene, pygas (raw as well as hydrogenated), crude butadiene, EDC, VCM, kerosene and quick lime also needs to be removed.
These measures would help revive the industry which in turn would be a catalyst in meeting the 12-14% industrial growth targeted by the Planning Commission for the 11th Plan.
Recognizing the vital role that the industry plays in the overall growth and economical development of the country, government recently unveiled National Policy on Petrochemicals that envisages massive investment in the sector. Fresh investments of Rs 84,000 crores are required to be made by 2011-12.
High incidence of indirect taxes on plastic products in India, currently over 30% (excise duty + VAT), is stifling demand. The rate is the highest in Asia Pacific region. China has indirect taxes of only 17%.
Existing 16% excise duty is too high for products required by the core sectors. There is strong rationale to reduce this to spur growth and tame inflationary pressure on Indian economy.
High import duty on key inputs makes Indian manufacturers uncompetitive. Import tariff on key petrochemical inputs like Propane, Naphtha for production of petrochemicals, octene, butene-1, capital goods, catalysts and chemicals needs to be completely eliminated.
To ensure adequate duty differential between end products and building blocks, import duty on ethylene, pygas (raw as well as hydrogenated), crude butadiene, EDC, VCM, kerosene and quick lime also needs to be removed.
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These measures would help revive the industry which in turn would be a catalyst in meeting the 12-14% industrial growth targeted by the Planning Commission for the 11th Plan.
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