India sharply cuts customs duties on plastic raw materials

The Indian government has announced sharp cuts in the customs duties on plastic raw materials, as part of a package of measures to cushion the impact of inflationary pressures on the economy.

“We are reducing the customs duty on raw materials and intermediaries for plastic products where our import dependence is high,” national media quoted Finance Minister Nirmala Sitharaman.

As per a notification issued by India’s Ministry of Finance, the customs duty on imports of naphtha, a basic raw material for petrochemical derivatives including plastics, was reduced to 1% from 2.5%.

The duty on propylene oxide was cut from 5% to 2.5%, while that on PVC resin was reduced to 7.5% from 10%. India is a huge importer of naphtha, propylene oxide and PVC resin.

Market sources said the import duty cuts would reduce downstream production costs amid potentially lower raw material prices.

Among other measures to rein in prices, the government is reworking customs duty on iron and steel and their raw materials.

“We are calibrating customs duty on raw materials and intermediaries for iron and steel to reduce their prices. Import duty on some raw materials of steel will be reduced. Export duty on some steel products will be levied," the minister said.

The government is also taking steps to improve the availability of cement to boost the construction industry in the country. This is being done through promoting better logistics to reduce the cost of cement, the minister said.

India’s retail price inflation, as measured by the Consumer Price Index (CPI), and inflation measured by the wholesale price index (WPI) have surged in recent months, mainly driven by a sharp increase in global commodity prices.