Chemical industry seeks corpus for modernisation, expansion

Mumbai, February 9: | Updated: Feb 11 2002, 05:30am hrs
Indian Chemical Manufacturers Association (ICMA) in its pre-Budget memorandum has urged the government to create a chemical industry modernisation, relocation and consolidation fund along the lines of the funds designed for textile, steel and shipping industries with initial corpus to be administered by the designated financial institutions.

ICMA also asked that soft loans should be made available at six per cent interest and funds should be arranged from the World Bank and other agencies to be administered by FIs. The coupon rates for long and short-term loans need to be differentiated as 6 and 10 per cent for long and short terms respectively.

ICMA urged that part of the excise duties should be converted into medium-term loan for modernisation and expansion which will be repaid after three years in five annual installments.

The association also sought the availability of fuels and energy at international prices with import duties on fuel oil, LSHS being reduced to nil. The customs duty on co-generation plants and captive power plants should be reduced to five per cent and removed cross subsidy by first replacing agriculture cess and then others steadily.

For modification of taxes and duties the association has urged that VAT regime should be implemented with effect from April 1 and there should not be any postponement.

The association has strongly recommended that special additional duty (SAD) be increased from 4 per cent to 12 per cent and should be applicable to manufacturers as well as traders to offset the effect of local taxes including entry tax.

The association has also asked the government to initiate measures for increasing demand to support mega plants and deemed exports should be treated on par with physical exports to facilitate local manufacturers to source their inputs domestically at international prices.

RBI has announced special financial package to manufacturers with export contracts of Rs 100 crore and above to boost the exports in six select product categories (pharma, agrochemicals, transport equipment, cement, iron & steel and electric machinery). ICMA has also requested that the scheme should be made applicable to the chemical sector.