FTA with GCC to impact Indian petrochemical sector – Study

20 Sep '14

4 min read

“Besides, the tariff protection is even negative for many products such as polymers vis-à-vis preferential duty for countries that have signed free trade agreements (FTA) with India, it adds.

“India is a net exporter of naphtha, the basic feedstock, while it imports large quantities of downstream petrochemical products, which has been discouraging value addition within the country,” the ASSOCHAM study highlights.

“An accelerated reduction in import tariff on polymers from 40 percent in 2001-02 to five percent in 2007-08 has resulted in increased flow of imports,” the study mentions.

Besides, the five percent import duty on naphtha feedstock for production of polymers has reduced the differential between upstream and downstream polymers to zero in India, while in other countries in the region and even in developed economies, this differential is 6.5 percent.

“India’s five percent import duty is much lower than that of Malaysia which has 20-30 percent duty, Philippines has 15 percent, Indonesia 20 percent and China 6.5-8.4 percent. This disparity is affecting the competitive viability of the domestic investment in petrochemical sector”, it informs.

“Import tariff on other key petrochemical inputs like propane, catalysts, capital goods and others further reduces the competitiveness of domestic petrochemical industry”, the study concludes by saying. (AR)

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