Mr. Vijay Sankar, President, Indian Chemical Council

The chemical sector is one of the major contributors towards the economy of India and plays a crucial role in the development of other industries and also the nation. With the current size of approximately USD 163 billion, the Indian chemical industry accounts for ~3% of the global chemical industry and is expected to reach USD 300 billion by 2025.

For union budget 2020, we urge the Finance Ministry to allocate enough budget for building better infrastructure along with an adequate amount of power and water supply which can support the industrial growth of chemicals. More infrastructure for setting up of Chemical industries in southern and eastern parts of India is needed to cut down the transportation cost of chemicals that are majorly set up in the western coast.

Ample and inexpensive feedstock for the chemical industry has been a problem for a while now, the duty on a lot of raw materials is high and it needs to be brought down to help the chemical manufacturing sector. Also, the government needs to address the issue of inverted duty structure. It has been observed that in some cases that the import duty applicable on the finished product is lower than the import duty on the raw material or intermediate product which discourages domestic value addition. Due to inverted duty structure, the domestic industry gets adversely affected as manufacturers have to pay a higher price for raw material, while the finished product lands at lower duty and cost. The issue has become more definite as India is now a part of Free Trade Agreements with countries like Japan, ASEAN and South Korea etc. Thus in order to overcome this issue, there is a need for a revised duty structure Raw material duty - 0 % to 5; Intermediates – 7.5 % to 12 %; Finished Goods – 15 to 20%.