FICCI recommends measure to support Chemicals & Petrochemicals sector


New Delhi: Mr P Raghavendra Rao, Secretary (Chemicals & Petrochemicals), Dept. of Chemicals & Petrochemicals, Govt. of India on Thursday said that the government intends to ensure seamless delivery of essential services to the people of the country.

Addressing members of FICCI Chemicals and Petrochemicals Committee, via video conferencing, Mr Rao said, “The government will ensure that supply chain of essential commodities remains uninterrupted and the situation can be leveraged to develop capacities.”

Pharmaceuticals and healthcare sectors and others that comes under essential services have a heavy dependency on C&PC sector for sourcing of raw materials are also exempted, e.g. Paracetamol is the key API and requires supply, further processing from both crude oil and bulk chemicals.

Mr Deepak C Mehta, Chairman, FICCI Chemical Committee & CMD, Deepak Nitrite Ltd. said, “Key raw materials include benzene, sulphur (obtained from crude oil), caustic, chlorine, hydrogen, nitric acid, sulphuric acid, acetic anhydride (manufactured as bulk chemicals). Another example being polymers used in medical products such as blood and intravenous bags, kidney dialysis & blood transfusion equipment, cardiac catheters, endotracheal tubes, artificial heart valves etc. These industries operate in a highly integrated vogue to support the value chains and hence should be exempted from any restriction during lockout periods.”

Mr Prabh Das, Chairman – FICCI, Petrochemicals Committee, MD & CEO, HMEL said, “Since oil refineries/petrochemical projects are in the category of national assets and the services are ‘essential supplies’ in nature, there is the need to ensure regular supplies of inputs/materials (in particular, related chemicals, catalysts, packing-materials and other consumable items) to the refineries and petrochemical manufacturing facilities located in different parts of the country and ports and ensure the smooth running of refineries and petrochemical projects.

At this critical time, industry and government need to join hands and collaborate to overcome this pandemic situation.

Some of the key recommendations:

Trade related recommendations

– To boost domestic exports, additional MEIS (1%) and duty drawback between 4%-5%

– The safeguard duty on any product, where it is important shall increase by 20%. Over February, import trigger safeguard duty in terms of quantitative

– Due to lower demand in Exports, Government may allow domestic sales from SEZ without charging Custom Duties to utilize domestic capacities and avoid extra import at lower prices

– The concept of Minimum Import Price shall be worked out from basic, intermediate to the final product which was earlier implemented in the steel industry should now be introduced in Chemical and Petrochemical industry. This can immensely protect Indian companies from China’s dumping. Therefore, for now it is recommended that Minimum Import Price (MIP) may be declared for the next 6-9 months for all products in the Chemical and Petrochemical Industry

– It is important to increase the Safeguard Duties to ensure that imports in excessive quantities do not harm the domestic industry. In normal duty rates, the bound rate could be 75% (by considering the upper limit/boundary line)

– Suspension of FTAs for the next 6 to 9 months period, till the domestic industry revives is also recommended

– Fast track all representations for non-tariff barriers, SGD, ADD to ensure dumping of products does not take place into the Indian market from China and SEA countries in the next 6-9 months

Operations related recommendations

– Most chemical plants in China, Europe and US have been operational during this crisis too, as they consider Chemicals as Essential. It is difficult to break the chemical chain very categorically into essential and non-essential and hence it is requested that entire chemical industry should be considered as an essential sector. This will ensure essential goods supply to the Pharma sector as well

– To keep the industry ready once the economy revives again, the government should allow 50% working of these industries in this period with guidelines and safety measures (ensuring sanitization, hygiene and support for workers)

– The Government must consider the plastic industry as an essential industry and permitted to operate in a scaled-down manner during the lockdown period. The current fiscal policy is not benefiting the MSME sector. There should be a 20% increase in loans without collateral for MSMEs sector

– Cash flow is critical to restart operations and therefore payment of electricity bills by the state electricity boards should have a moratorium of minimum one month and payable in 5 installments. Additionally, net GST payable should also be given a moratorium of 3 months

– Digital negotiation of documents should be allowed for exports until the lockdown is lifted

– Facilitation of port clearance for domestic Cargo-Fuels, Chemicals and Petrochemicals are crucial

– Logistics chain must be unlocked. Task force can be set up at government level

Custom Duty related recommendations

In order to protect the existing investments of the Indian Polymer Producers and Polymer Processors, and for attracting new investments in the sector, it is essential to provide the sector with reasonable Duty Differential over their respective raw materials.

– Basic Custom Duty on primary Feedstock i.e. on Crude, Natural Gas /NGLs, Naphtha and Reformate shall be NIL

– Basic Custom Duty on Polymers i.e. Polypropylene (HS Codes 39021000 and 39023000) and Polyethylene (HS Codes 39011010, 39011090, 39012000) shall be revised from current 7.5% to 12.5%

– Basic Custom duty on Products made of Polymers (HS Codes 3916 to 3926) shall be revised to min. 20%, while ensuring that a minimum duty differential of 10% is maintained over the Intermediate products

– Import Duty on Titanium Dioxide (HS Code 3206 1100) shall be reduced from 10% to 5%

– To prevent under-invoicing in the import of Polymers & Products made of Polymer, Anti-Dumping or Safeguard Duty should be applied on import of cheap Finished Products, and polymers in consultation with the Indian Petrochemical Industry