The Federation of Indian Chambers of Commerce and Industry (FICCI) has urged the Ministry of Chemicals and Fertilizers to raise customs duties on petrochemical products.
In a letter, FICCI recommended increasing the import duty on polypropylene and polyethylene from 7.5% to 12.5%, according to a report by PTI.
Concerns Over Import Dependency
FICCI highlighted the threat posed by lower import duties, which allow countries like China to dump petrochemical products into India. These products are vital across industries such as automotive, packaging, agriculture, electronics, medical devices, and construction.
India currently faces a significant shortage of these materials. The projected deficit is expected to reach 12 million tonnes annually by 2030. This deficit is equivalent to $12 billion at current price levels.
Reducing Imports to Strengthen Domestic Capacity
Chemical and petrochemical imports are the second-largest category of imports into India, creating a significant opportunity to reduce the import bill.
FICCI emphasized that excessive imports undermine domestic producers, eroding their margins and competitiveness in local markets. This situation leads to underutilization of domestic capacity and an unnecessary outflow of foreign exchange, widening the current account deficit (CAD).
Addressing Domestic Challenges
Despite higher input costs, including capital, power tariffs, logistical bottlenecks, and infrastructure gaps, the industry is preparing for increased demand.
FICCI argues that curbing imports through higher customs duties will promote local production. It will also mitigate risks such as long payback periods and low returns on investment for new projects.
Minimal Impact on End-Product Prices
FICCI assured that the proposed increase in customs duties would have a negligible impact on the prices of end-products. At the unit level, the price rise would be marginal and easily absorbed by the Indian economy.
Strategic Move for Economic Growth
FICCI described the duty hike as a strategic initiative. It aims to close the demand-supply gap, enhance the petrochemical industry, and drive India’s long-term economic growth.
As reported by livemint.com, the move is expected to encourage self-sufficiency, reduce import dependency, and create a more robust industrial base for the nation.
