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High duty on polymers hurts plastic industry: CII

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Our Regional Bureau Ahmedabad
Last Updated : Feb 28 2013 | 1:54 PM IST
The domestic plastic industry can register a good compounded growth as well as a 20 per cent growth in exports if the high rate of import duty on plastic polymers is removed, says a CII report.
 
The import duty on plastic polymers, a principal raw material for the plastic industry, continues to be at the peak rate of 25 per cent after the Budget.
 
"More than 70 per cent of the raw materials are processed in Gujarat and the state accounts for around 15 per of the country's plastic industry. If the import duty on plastic is reduced, India will become globally competitive and can give a tough competition to China," said Hasmukh Patel, chairman, executive council, Gujarat state Plastic Manufacturers' Association (GSPMA).
 
The CII said the cost of naphtha will be considerably reduced after value added tax is introduced because the polymer industry will not have to pay sales tax at 15 to 20 per cent on naphtha and natural gas.
 
However, the government should have reduced the import duty on feedstocks such as naphtha by at least five per cent.
 
The CII said the policy on reservation has deprived the polymers industry of participation in the export trade.
 
Further, the policy of high cenvat rate and sales tax has only helped create a grey market.
 
The CII recommended that the tableware, kitchenware and household articles made of plastic be brought on par with the stainless steel, glass and aluminium.
 
The plastic industry has posted a growth of 12 per cent during the current financial year as compared to the previous fiscal, but the growth is dependent on the export of raw material and not finished goods.
 
The import duty on raw material is higher as compared to that in neighboring countries.
 
The domestic plastic industry is currently facing competition from China on the finished goods front.
 
The study suggested that plastic, being an essential commodity, should be classed under four per cent VAT and eight per cent excise duty. The import duty on machinery moulds should be brought down to reasonable levels, which will facilitate upgradation of production technology, the study said.

 
 

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