Special additional duty cut to boost polymers

Reduction in customs duty on feedstocks will benefit Polymers industry  

Budget provisions  

The following announcements have been proposed in the Union budget 2015-16  

Basic Customs duty on isoprene and liquefied butane is being reduced from 5% to 2.5%.  

Basic Customs Duty on ethylene dichloride (EDC), vinyl chloride monomer (VCM) and styrene monomer (SM) is being reduced from 2.5% to 2%.  

Basic Customs Duty on butyl acrylate is being reduced from 7.5% to 5%.  

Basic Customs Duty on anthraquinone is being reduced from 7.5% to 2.5%.  

Basic Customs Duty on antimony metal and antimony waste and scrap is being reduced from 5% to 2.5%.  

SAD on naphtha, ethylene dichloride (EDC), vinyl chloride monomer (VCM) and styrene monomer (SM) for manufacture of excisable goods is being reduced from 4% to 2%.  

Excise duty on sacks and bags of polymers of ethylene (Plastic bags) other than for industrial use increased from 12% to 15%.  

Reduce corporate tax from 30% to 25% over the next four years, starting from next financial year.  

Education cess and the Secondary and Higher education cess is proposed to be subsumed in central excise duty. The general rate of central excise duty of 12.36% including the cesses will be rounded off to 12.5%.  

The Education Cess and Secondary and Higher Education Cess shall be subsumed in the revised rate of Service Tax. Thus, effective increase in Service Tax rate will be from existing rate of 12.36% (inclusive of cesses) to 14%  

Efforts on various fronts to implement GST from next year  

Industry Expectations –Partially fulfilled  

Expect import Duty on Naphtha be reduced to 2.5% to bring it at par with other petrochemical feedstock.  

Expect import Duty on key petrochemical inputs Ethylene Di Chloride (EDC), Vinyl chloride monomer (VCM) and Styrene may be brought down to zero.  

Expect import Duty on polyethylene terephthalate (PET), Acrylonitrile butadiene styrene (ABS) and styrene-acrylonitrile (SAN) be raised from the existing level of 5% to 7.5%  

Expect import Duty on Acrylonitrile (ACN) be raised from 2.5% to 5%  

Expect import Duty on Purified Terephthalic Acid (PTA) and mono ethylene glycol (MEG) may be raised from existing level of 5% to 7.5% to rationalize the tariff structure for the polyester sector  

Expect central Excise Duty on Plastic Polymers and Articles of Plastics be reduced from 12% to 8%.  

Expect import duty structure on imports of articles of plastics is re-calibrated to increase import duty on plastic goods from current 10 % to 15%  

Expect reduction of Custom duty on Titanium dioxide from 10% to 5% to correct inverted duty structure  

Expect import duty on PVC resin be raised to 10% from existing 7.5%.  

Budget impact

Union Budget 2015-16 has reduced basic customs duty (BCD) on certain items to boost domestic manufacture and to address the issue of inverted duties.

This would encourage new investment and capacity addition in the chemicals and petrochemicals sector.

The duty reduction in feedstock would strengthen the domestic manufacturing in India making it more competitive leading to surge in exports of finished goods

Stocks to watch  

Supreme Industries, Jain irrigation, Sintex Industries, Time Technoplast  

Outlook

Union Budget 2015-16 has reduced basic customs duty (BCD) on certain items to boost domestic manufacture and to address the issue of inverted duties.

This would encourage new investment and capacity addition in the chemicals and petrochemicals sector.

The duty reduction in feedstock would strengthen the domestic manufacturing in India making it more competitive leading to surge in exports of finished goods