The Association, in a representation to Union Chemicals and Fertilizers Minister, referred to a proposal for recommending 15 per cent COVID-19 Import Tax on chemicals and other products from May, 2020 to March, 2021.
As the COVID-19 pandemic has created massive disruption and unprecedented disaster world over, the domestic industry has been impacted across the country, it said in the letter.
"Any increase in tariffs on chemicals might help one segment of domestic industry, but would be highly detrimental for various other key sectors of domestic industry like Textiles, Soap and Detergent, Pharmaceuticals, Aluminium, Drugs Manufacturers, etc," the AAI said.
This sectors are highly dependent on imported raw materials including chemicals and products for domestic value addition and also contribute to forex earnings for the country by means of export of finished products, it said.
They also employ millions of people across segments and also provide a thrust for development of other related sectors by supplying critical raw materials/ finished products to downstream industries majorly SMEs.
The domestic consumer industries have been amongst the worst hit, and are facing lot of hurdles due to the lockdown and disruption in supply chain of critical raw materials.
For example, Caustic Soda is a major raw material for soaps and detergents, textiles, aluminium sectors, and these sectors require uninterrupted supplies of caustic soda for sustainable operations, it said.
On one hand amidst global meltdown of commodities, the Aluminium LME prices have crashed by 40 per cent, resulting in huge cash losses for domestic producers. On the other hand, the industry is struggling with huge burden of unrebated Central and state taxes and duties, constituting 15 per cent of Aluminium production cost which is amongst highest in the world, it said.
"This is adversely impacting sustainability and competitiveness of Aluminium industry," the AAI said, adding any further tax on import of chemicals would be a huge disaster for the domestic industry relying on imports for continued operations.
Imports of majority of chemicals are already restricted through various tariff and non-tariff barriers, it said, adding that high basic custom duty on imports leads to an inverted duty structure as finished products can be imported at less duty than the raw materials itself. This apart, various safeguard duties/ Anti-Dumping Duty already in place for import of various chemicals.
"Any further restriction on one of the major raw materials will hamper the economic viability of domestic industry to the extent of closure of operations thereby affecting the overall economy. The burden of any additional tariffs will be detrimental for consumer industry and defeats the mechanism of marketing freedom in a country," the association said.
Unlike other industries, the domestic industry cannot pass through the burden of escalated cost to end consumer as the prices of finished products are market driven, and governed by global forces, it said.
Global competitors in Australia, Indonesia, Canada, Russia, Vietnam have the advantage of procuring raw materials at competitive pricing and the Indian industry is at a disadvantage, it claimed.
"In view of the above and existing several restrictions on chemicals with tariff and non-tariff barriers in place and in the best interest of Indian Industry, any further increase in tariffs will be highly detrimental for the sustainability and cost competitiveness of already ailing Indian industry," it said
Therefore, the proposal of increasing tariffs should be withdrawn for the best interest of domestic industry, the AAI added. PTI SKN RG RG
Disclaimer :- This story has not been edited by Outlook staff and is auto-generated from news agency feeds. Source: PTI