The Union Budget for the financial year 2023-2024 presented an overall welcome change for the domestic chemical industry.
India’s focus on sustainability through manufacturing greener chemicals can be observed through the several announcements made in the Budget, most notable of which was a duty reduction on crude glycerin for manufacturing Epichlorohydrin (ECH). Crude glycerin is obtained as a by-product of biodiesel manufacture and is produced in large volumes in South East Asian geographies such as Thailand and Indonesia. It is then valorized to produce chemical intermediates such as ECH, which is largely used to produce epoxy resins.
A customs duty reduction on acid-grade fluorspar has manifold implications as the mineral serves as the precursor to an important raw material for fluoropolymers – Hydrofluoric acid (HF). Fluoropolymers have been gaining importance as new age polymers, and therefore are instrumental in applications and areas such as consumer electronics, smart cities, life-saving diagnostics, and communications. Since India is a net importer of fluorspar, this bodes well for backward integrated fluoropolymer manufacturers in India.
Technical grade pesticide manufacturers have welcomed the separate Harmonized System (HS) code for Technical Grade pesticides from Formulations as these were charged with same custom duties; a separate HS code would effect in lowering imports for certain technical grade pesticides.
The table below outlines the changes in custom duty and the possible implications for the domestic chemical industry
Other announcements influencing the chemical industry indirectly are presented below:
It is evident that the government has demonstrated India’s readiness to adopt sustainable practices and thereby prove India’s commitment to reducing its net emissions. A reduction in basic customs duty for certain inputs for the industry will enhance India’s competitiveness and would lead to export promotion, especially considering the recent extension of Remission of Duty on Taxes on Exported Products (RoDTEP) Scheme to the Chemical industry in December 2022.