The Hindu Business Line : High import duty hurting plastics sector: CII study

THE domestic plastics industry can register a compound growth rate as well as export growth at 20 per cent if the high rate of import duty on plastic polymers is removed, according to a report prepared by the Confederation of Indian Industry (CII).

Incidentally, the import duty on plastic polymers, a principle raw material for the plastics industry, continues at the peak rate of 25 per cent after the Budget.

The report has said that the cost of naphtha will be considerably reduced after VAT is introduced because the polymer industry will not have to pay sales tax at 15-20 per cent es on naphtha and natural gas.

However, it has been stated that the Government should have reduced import duty on feedstocks such as naphtha by at least five per cent.

The CII report said that the policy on reservation has deprived the polymers industry of participation in the export trade.

Further, the policy of high Cenvat rate and sales tax has only helped create a grey market.

It has, thus, been recommended that tableware, kitchenware and household articles made of plastic be brought on par with those made of stainless steel, aluminium and glass.

According to the report, the plastics industry has registered a growth rate of 12 per cent during the current fiscal year compared to the previous fiscal, but its growth is dependent on the export of raw materials and not on finished goods.

The import duty on raw materials is higher compared to that in neighbouring countries. Not surprisingly, the domestic plastics industry is currently facing competition from China on the finished goods front.

The report suggested that plastics, being an essential commodity, should be classed under four per cent VAT and eight per cent excise duty, while the import duty on machinery and moulds should be brought down to a reasonable level, facilitating upgradation of production technology.

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