India’s chemical end-users to face 15%

India’s chemical end-users to face 15%

India’s chemical end-users to face 15% “Covid Tax”

India has proposed to impose a 15% tax on all the chemical and petrochemical imports, with the objective of protecting the domestic industry in the current fiscal year as the nation fights against the pandemic. Under the proposal, this provisional duty would also extend to all the preferential imports that come under India’s various free trade agreements. It would cover organic and inorganic chemicals, plastics, man-made filaments, and staple fibers and rubber. The downstream end-users, however, are strongly opposing to the measure named the covid tax, as it eventually will increase the cost of production. This proposal has been put forward by a certain section of the industry to the department of chemicals and petrochemicals, and the department is still making consultations with the stakeholders. The commerce department hasn’t yet taken a stand on the issue and is still waiting to receive a formal proposal by the department of chemicals and petrochemicals.

Several industries, that are dependent on the chemicals, raw materials or intermediate goods in these sectors, have so far opposed the proposal, as any further increase or additional duty would turn out to be a burden for these industries and it would really become difficult for them to sustain. According to an expert from the chemical industry, if India imposes Covid tax on the chemicals imported from other countries and if the said countries also start levying additional duty on the exports from our country, it can turn disastrous for the chemical exports industry.

The commerce and industry ministry is currently working on a plan to substitute the imports under the new Atmanirbhar Bharat Abhiyan and is also looking to correct the duty structures, including any kind of duty discrepancies with the countries that India has FTAs with. Several incentives are to be given to promote the local production and export competitiveness like the export incentives parity with China and duty-free import of plant and machinery might also be offered to the chemical and petrochemicals industry.