In a major blow for the plastic industry, India has raised the basic customs duty on polyvinyl chloride (PVC) flex films to 25 percent now from 10 percent earlier. The move aims to reduce its imports in India and control its usage in order to prevent irresponsible dumping. The customs duty on several other products has been reduced to 10-15 percent.
Presenting the Union Budget 2024-25, India’s Finance Minister Nirmala Sitharaman, stated, “PVC flex films, also known as PVC flex banners or PVC flex sheets are non-biodegradable and hazardous for environment and health. To curb their imports, I propose to raise the BCD on them from 10 percent to 25 percent.”
Last year, India’s Finance Minister Nirmala Sitharaman increased tariffs on various basic petrochemical raw materials such as naphtha, styrene, and vinyl chloride monomer (VCM). Memorandum explaining provisions in the Union Budget speech simplifies the tax proposals which says that the tariff on naphtha has been raised to 2.5 percent in the Budget 2023 from 1 percent earlier. Similarly, tariff on both petrochemical raw materials i.e. styrene and VCM has been raised to 2.5 percent from 2 percent earlier.
Naphtha is used as feedstock for pyrolysis (NCC) to produce ethylene, propylene, butadiene, benzene, toluene and xylene that are basic feedstock for petrochemistry. They are in turn used to make a wide range of products including synthetic resins, synthetic rubber, fiber, dye and medicine.
Pankaj Poddar, Group Chief Executive Officer of Cosmo First, said, “India’s packaging industry is growing at a healthy pace and is contributing significantly through the export route to the exchequer. There is a need to enhance skills for youth, innovation, and R&D support for the sector. We welcome the focus in the budget on creating job opportunities in the manufacturing sector and this coupled with support to the employers will propel the industry to new heights. Further, the introduction of credit guarantee scheme for MSMEs and facilitating term loans to MSMEs for purchase of equipment without collateral or guarantee will go a long way to enhance access to capital in the sector.”
| Union Budget 2024: Tariff changes in chemicals, petrochemicals and plastics (%) |
| Particulars | From | To |
| Polyvinyl chloride (PVC) flex films (also known as PVC flex banners or PVC flex sheets (The currently applicable BCD on all other goods falling under heading 3920 and 3921 shall be maintained by suitable amendment in the relevant notification(s) | 10 | 25 |
| All goods other than Poly vinyl chloride (PVC) flex films/flex banner of HS Code 3920, (other than 3920 99 99) or 3921 | 25 (w.e.f. 24.07.2024) | 10 |
| All goods other than Poly vinyl chloride (PVC) flex films/flex banner of HS Code 3920 99 99 | 25 (w.e.f. 24.07.2024) | 15 |
| Laboratory chemicals (Heading 9802 covers all chemicals, organic or inorganic, whether or not chemically defined, imported in packings not exceeding 500 gms or 500 millilitres and which can be identified with reference to the purity, markings or other features to show them to be meant for use solely as laboratory chemicals) | 10 | 150 |
| Ammonium Nitrate, whether or not in aqueous solution | 7.5 | 10 |
| Methylene Diphenyl Di-isocyanate (MDI) for use in the manufacture of Spandex Yarn | 7.5 | 5 Subject to IGCR conditions |
| Naphtha for manufacture of Fertilisers (scope of exemption is being reduced only to Naphtha) | - | Conditional |
| Super absorbent polymer for manufacture of adult diapers and specified goods | - | Conditional |
| Capacitor grades polypropylene granules for manufacture of Capacitor grade plastic | - | Conditional |
| Anthraquinone or 2-Ethyl Anthraquinone for use in manufacture of Hydrogen peroxide | - | Conditional |
| Specified material for manufacture of EVA (Ethylene Vinyl Acetate) sheets or backsheet, which are used in the manufacture of solar photovoltaic cells or modules (Scope of materials which can be imported is being increased) | - | Conditional |
| Polytetrametylene ether glycol, (PT MEG) for use in manufacture of spandex yarn | - | Conditional |
| Ethylene- propylene- non-conjugated diene rubber (EPDM) for manufacture of insulated wire and cables | - | Conditional |
Sources: Union Budget 2024, and Polymerupdate Research
Comprehensive roadmapTarun Sawhney, Vice Chairman and Managing Director, Triveni Engineering India Ltd, believes that the Budget 2024 lays out a comprehensive roadmap for a 'Viksit Bharat,' focusing on key areas such as agriculture, manufacturing, and energy security. With increasing demand and growing concerns about climate change, there is an urgent need to shift towards high-yielding and climate-resilient seed varieties.
“We are optimistic that the Government’s allocation of Rs 1.52 lakh crore for R&D in agriculture and allied sectors, along with the push towards natural farming and Digital Public Infrastructure with a digital crop survey, will enhance productivity and significantly boost farmers' incomes, particularly for sugarcane farmers who face challenges like uneven rainfall and red rot disease in certain pockets of the country. Natural farming will also help the Compressed Biogas sector to enhance the financial attractiveness due to assured disposal of the liquid fertilizer, Sawhney added.”
In the energy sector, the Government's emphasis on renewable energy sources such as solar, thermal, and nuclear, along with the upcoming policy on pumped storage projects for electricity storage, will facilitate the smooth integration of renewable energy into the overall energy mix. This approach will address the variable and intermittent nature of renewable energy, ensuring a stable and reliable energy supply. Further the increased focus on climate finance and tools such as carbon credits would enhance the speed of green transition through improved viability of the Bioenergy sector.
Employment boost for manufacturing sectorThe government’s new schemes, announced in the Budget 2024, are aimed at incentivizing additional employment in the manufacturing sector. This forward-thinking strategy will not only create job opportunities but also encourage the hiring of fresh talent, driving economic growth and fostering innovation.
Shreesh Chaturvedi, Co-founder, Vareyn Solar, a Turnkey Solar EPC company, said “The Union Budget 2024 has been promising, which will yield a positive impact on all industries including the renewable energy sector in India. The focus on energy security and creating climate-resilient facilities is crucial. As we face increasing environmental challenges, ensuring a stable and sustainable energy supply is more important than ever.”
Chaturvedi further added, “The innovative steps towards transforming agricultural research and the Finance Minister's emphasis on climate-resilient crop varieties can be a game-changer especially for the renewable energy sector. This step aligns seamlessly with our commitment to integrating sustainable energy solutions into every aspect of life including the agricultural sector, ensuring our farmers are better equipped to handle climate challenges. This is a huge opportunity to achieve India’s goals of net-zero by 2070.”
DILIP KUMAR JHA
Editor
dilip.jha@polymerupdate.com
