Budget 2025: Chemical Industry Pushes for Customs Duty Revisions to Boost Domestic Manufacturing
- 23-Jan-2025 3:36 PM
- Journalist: Thomas Jefferson
With the Union Budget 2025 around the corner, the chemical industry has urged the government to revise customs duties on critical products such as Polyethylene Terephthalate (PET), Polyvinyl Chloride (PVC), and polyester fiber to address the influx of low-cost imports from China and boost domestic manufacturing. Media reports indicate that China, as the world's largest exporter of key chemical products, including PET resins, Purified Terephthalate Acid (PTA), PVC, and polyester fiber, continues to dominate global markets, creating challenges for Indian manufacturers.
India has significantly expanded its capacity for PET bottle-grade chip production in recent years. However, the domestic market has seen an increase in low-cost imports, particularly from China, eroding the competitiveness of local manufacturers. According to media sources, this trend is further fueled by global overcapacity, stagnant demand growth in several countries, and the evolving geopolitical landscape. Together, these factors have heightened the risk of cheap imports flooding the Indian market.
For PVC, a critical material used extensively in construction and other industries, the industry has recommended restoring customs duties to the pre-2022 level of 10%. Media outlets have highlighted that such a measure could incentivize the development of domestic manufacturing capacity, reducing India’s reliance on imports and addressing the growing needs of the economy.
In the case of man-made fiber (MMF) polyester, the industry has sought an upward revision of tariffs to 10% to counter the impact of low-cost imports, particularly from China. Media reports suggest that this tariff adjustment would not only shield domestic manufacturers from unfair competition but also bolster local production capacities. This aligns with the government’s ambitious goal of achieving $350 billion in textile sector revenues by 2030.
Industry representatives have presented these concerns to the government, emphasizing the need for supportive policies to enhance competitiveness in the chemical and textile sectors. Finance Minister Nirmala Sitharaman is set to present the Union Budget on February 1, and these proposals are expected to be deliberated upon.
Separately, media reports indicate that the government is likely to consider reducing customs duties on inputs used in manufacturing medical equipment, electronic goods, footwear, and toys to promote local production. Key demands from the customs perspective for the 2025-26 Budget include rate rationalization, simplifying the customs regime, and improving dispute management. These reforms follow the rationalization measures announced during the Budget in July 2024.
As industries await the Budget announcement, the focus remains on implementing balanced policies to protect domestic manufacturers while supporting economic growth across various sectors.