All India Plastic Manufacturers' Association (AIPMA) and Organisation of Plastics Processors of India (OPPI) have demanded a reduction in import and excise duties to save the industry from slipping into recession. | |
| P P Kharas, president, OPPI, and S J Atre, president, AIPMA, complained the last 15 months had seen a sharp rise in prices of polymers in the local market far in excess of the rise in international polymer markets. This had made products expensive. |
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| In addition, customs duty on polymers was at 20 per cent, offering unjustified tariff protection to indigenous producers. |
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| Also, the 2004 budget raised excise duties from 8 per cent to 16 per cent, leading to further increase in plastic goods prices. |
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| This would permit inflow of cheaper goods from China and Taiwan. Indian companies would be uncompetitive under such a tax regime. |
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| The processing industry associations asked the finance ministry for reduction in import duty on polymers from 20 per cent to 10 per cent of CIF. |
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| Customs duties in the ASEAN region were 8 per cent of CIF or lower. The customs duty in China was 7 per cent and being brought down by one per cent every year. |
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| In India the peak rate of import duty applicable to semi-finished and finished products was being applied to polymers which was the basic raw material. |
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| In January 2004, when steel prices were raised by local producers, the ministry reduced import duty on steel from 20 per cent to 10 per cent. |
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| Alloy steel, copper, lead and zinc were classified as basic raw materials and the customs duty on these items was reduced from 20 per cent to 15 per cent in the 2004 budget, they pointed out. |
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| Under WTO norms, the government was required to bring down the peak customs duty to 10 per cent by 2005. All relevant factors supported immediate duty reduction. |
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| Despite the very low per capita consumption of plastics in India of 4 kg/year, against the world average of 25 kg/year, the high rates of customs, excise and sales tax levies had retarded the growth of plastics applications. Such artificial barriers prevented the industry from growing, they alleged. |
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| For example, to improve agricultural productivity, 2.85 lakh hectares of land had to be brought under drip irrigation. More green houses, shade nets, anti-bird nets, row covers, etc. had to be built. Taxes had made these projects unviable on a mass scale. |
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| Consumption of plastics polymers in 2003-2004 was 4.2 million tonnes and turnover of the industry was around Rs 28,000 crore. Imports of polymers in 2003-2004 was around 410,000 tonnes. The number of processing units in India was around 20,000, with 75 per cent in the small-scale sector, said the associations. |
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