COVID-Tax Is To Be Imposed On Petrochem And Chemical Imports-

Columnist – Pooja Nanda

After the pandemic’s effect on industries and businesses, new strategies are being found out and new ways are being discovered to overcome the slump. As swiftly moving businesses got a halt all of a sudden, that no one could get any time to plan how to combat the lock downs, the earning graph of every business fell down rapidly. Now governments are easing up the lock down norms, so chemical and petrochemical imports are most likely to face 15% Covid-19 tax as India is planning to do so from May 1, 2020 to March 31, 2021. According to Government, it would help to protect domestic industry. According to the proposed plan, the provisional duty would be applied on all preferential import under India’s different free trade agreement (FTA). This would be applied on organic chemicals, inorganic chemicals, plastic, rubber, man-made filaments and on man-made staple fibres too.

An official, who holds the insight over the proposal, told that the proposal has been put forth by a particular section of industry in front of the department of chemicals and petrochemicals. Now the department is deliberating with stakeholders to arrive at final decision. It is worth knowing that 15% tax would be in addition to the lowest terrif that is called applied most favoured nation (MFN) duty in trade parlance. Significantly $86.82 billion of  these products has been imported by India during the period of April 2019 and January 2020, and almost 19% of the inward shipments are arriving from China alone.

The issue is being pondered by the commerce department and the department is now awaiting a formal proposal by the department of chemicals and petrochemicals. However the official revealed that many Industries, that are depending on chemicals, raw materials or intermediate goods in these sectors, are not in favour of the proposal. So many industries like chemicals and plastics have strongly opposed the proposal giving the example of similar action by other countries that would harm Indian exports.

A representative from the chemical industry said that such kind of tax or any further burden of additional duty would be a big burden on industries. It will make it hard for these industries to survive. If India  levies COVID-Tax on chemicals imported  from other countries and if that country also starts doing the same, means starts to impose additional duty on exports from our country, it will be a havoc for chemical exports industry. As India’s chemical exports came down near about 42% on year in April to $1.2 billion while those of plastics fell 25% to $478.47 million during the same previous month April 2020.

A plan is already being worked on by  the commerce and industry ministry with the aim to substitute imports under the ‘Atmanirbhar Bharat Abhiyan’ and ministry is trying to maintain a rectified duty structure, including any duty discrepancies with countries that India has FTAs with. Chemical and petrochemical sector could be provided with incentives such as export incentives parity with China and duty free Import of plant and machinery etc with the aim to  promote local production and export competitiveness. 

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