Budget cuts duties on polymers to give a boost to plastics industry

The Union budget 2015-16 has attempted to remove anomalies in the duty structure prevailing in polymers industry to support the government’s ‘Make in India’ initiative for plastic processing. While basic customs duty (BCD) on isoprene and liquefied butane has been reduced from 5% to 2.5%, BCD on ethylene dichloride (EDC), vinyl chloride monomer (VCM) and styrene monomer (SM) has been brought to 2% from 2.5%. Similarly, basic customs duty on butyl acrylate is being reduced from 7.5% to 5%. Budget Special Additional Duty (SAD) on naphtha, EDC, VCM and styrene monomer for manufacture of excisable goods has been reduced from 4% to 2%.
 
All these proposes are aimed at resolving inverted duty structure, which is expected to give a fillip to the downstream petrochemicals industry such as plastic product manufacturers. "The proposal to exempt SAD on most items and to reduce customs duty on key manufacturing components such as ethylene dichloride, vinyl chloride monomer, butyl acrylate, etc are welcome changes to address the inverted duty structures. This will improve competitiveness and encourage new investment and capacity addition in the related sectors," said Sudhir Shenoy is the CEO of Dow India.
 
On the other hand, plastic bags and sacks are expected to cost more as finance minister Arun Jaitley has proposed to increase the excise duty on plastics bags (other than for industrial use) from 12 per cent to 15 per cent.