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India cuts customs duty on plastics raw materials, also reduces central excise on petrol, diesel

Petrochemical industry | 21 May 2022 22:20 IST | Polymerupdate.com

In a major respite from overheating inflation, the Indian government on Saturday announced a cut in customs duty on plastics raw materials.

While the exact percentage of customs duty cut was not immediately known, India's Union Finance Minister Nirmala Sitharaman said on Saturday that the government will rework customs duty on raw materials including the one used for manufacturing plastics articles.

While announcing the decision through Twitter, the finance minister said, "We are also reducing the customs duty on raw materials and intermediates for plastics products where our import dependence is high. This will result in a reduction of cost of final products." She also announced a reduction in import duty on other raw materials and improve logistics services.

This is worth mentioning here that various industry bodies and associations had urged the government to take measures to curb the cost of raw materials which will eventually make the production cost of final products lower.

In yet another announcement, the government has also cut central excise duty on petrol and diesel by R 8 a litre and Rs 6 a litre respectively. This will result in the price of petrol and diesel declining by Rs 9.5 a litre and Rs 7 a litre respectively. These announcements were made effective immediately.

The finance minister also urged the state government to follow the suit for relief to the common man.

Aditi Nayar, Chief Economist, ICRA Limited, said, "The welcome reduction in excise duty will help to cool the inflation trajectory going ahead and complement monetary policy. We project the May 2022 cpi inflation at between 6.5-7.0%. The fiscal cost, while material, can be absorbed by higher than budgeted revenues through other taxes. We now estimate the tax revenues of the GoI to surpass the budget estimates by at least Rs. 1.3 trillion even after the excise reduction."

The excise duty cut would certainly help control inflation and complement the Reserve Bank of India's monetary policy tightening in taming inflation. In fact, both CPI and WPI had hit set periodic records in April 2022.
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