THE PLASTICS EXPORT PROMOTION COUNCIL

(Sponsored by Department of Commerce, Govt. of India)

Reaction from PLEXCONCIL to the Union Budget Announcement

“Increase in PVC import duty will play spoilsport in plastic processing sector”

The Union Budget presented by Smt. Nirmala Sitharaman, Hon’ble Finance Minister, Government of India, on 5^th July, 2019 is a forward looking and inclusive one.

·         The announcement of an increase in Basic Customs Duty of Poly Vinyl Chloride (PVC) falling under heading 3904 from 7.5% to 10% and reduction in Basic Customs Duty of Ethylene Dichloride (EDC) falling under tariff item 29031500 from 2% to nil will help the domestic polymer manufacturers who were demanding these as an incentive to enhance domestic production capacity. However, Plexconcil along with other plastics associations across the country feel that the increase in PVC import duty would help polymer manufacturers, but will play spoilsport in the plastic processing sector. PVC imports into India attracts Anti-Dumping Duty on imports from certain countries, resulting in increased cost for the plastics processors. The local supply is catering to less than 50% of the total production and hence the processing industry by and large remains with import as substituent and with this increase in import duty the cost of production will be higher which directly hampers the export potential of PVC finished products in the international market and we will be less competent amongst the global players. Hence, this increase in import duty of PVC will directly affect the domestic and as well as export market for our plastic processing sector.

·         The announcement of an increase in Basic Customs Duty of Vinyl Flooring falling under heading 3918 from 10% to 15% shall help in curbing imports from South Korea, China and the ASEAN countries, and encourage consumption of Vinyl flooring produced domestically, thus boosting production by the domestic industry, which in turn will boost employment, since this is a labour-intensive sector.

·         Likewise, the announcement of an increase in Basic Customs Duty of plastics products falling under tariff items 39269091 and 39269099 from 10% to 15% shall help in curbing imports, and encourage domestic manufacturing, thus boosting employment.

·         We are happy to note the reduced corporate tax rate of 25% for companies with an annual turnover of Rs 400 crore in FY 2017-18. Previously this was limited to companies with an annual turnover of Rs 250 crore. Since 75% of the plastics processing companies are MSMEs, this is a welcome move for them.

·         The government’s proposal to streamline multiple labour laws into a set of four labour codes shall also help in the ease of doing business for plastics processors.

·         Amnesty scheme for past disputes in the form of Sabka Vishwas Legacy Dispute Resolution Scheme, is another positive move targeting to help resolve pending cases related to service tax and excise duty. It is believed that Rs 3.75 lakh crore remains blocked in litigations in service tax and excise.

·         Further simplification of the GST process, the proposal to launch a fully automated GST refund model, and the filing of returns on a quarterly basis for companies having a turnover less than Rs 5 crores, will enhance the ease of doing business for plastics processors.