India to consider imposing a 15% “Covid-19” import tax on chemicals to help protect its domestic industry from major exporting nations in East and SE Asia. The domestic industry has been badly affected by a major demand slump as a result of nationwide coronavirus lockdown.
The new tax, which would be in effect from 1st May 2020 to 31 March 2021, is being proposed by a government sub-committee under the Chemicals and Fertilizers Ministry.
Industry body Chemexcil (Basic Chemicals, Cosmetics & Dyes Export Promotion Council), which is requesting feedback on the plan from the Ministry said that the move is an effort “to protect the domestic producers against any surge in imports caused by the pandemic.”
The commerce department is yet to take a stance on the issue and is awaiting a formal proposal by the department of chemicals and petrochemicals.
“The current situation presents a real threat of an extended period of price depression on account of aggressive exports from China and other countries, which will force several producers to suspend operations and ultimately close down,” it said.
The proposed tax will be added in addition to current import duties.
The committee is also proposing that all duties and taxes on exports be refunded for domestic manufacturers.
With possible exemptions for ethylene, paraxylene (PX), ethylene dichloride (EDC) and vinyl chloride monomer (VCM), the recommendation covers all other chemicals and petrochemicals imported by India.
Various industries such as chemicals and plastics have vetoed the proposal, citing similar action by other countries that would harm Indian exports.
India’s chemical exports fell almost 42% on year in April to $1.2 billion while those of plastics declined 25% to $478.47 million last month.
India is a major chemicals importer, including polymers, monomers and solvents. If introduced, the new tax would impact domestic importers and distributors.