RIL would be absorbing 40% of the rise in input costs and prices will continue to be substantially lower by $120 per tonne as compared to the prevailing international prices.
RIL said that it was slashing polymer prices inspite of increasing input costs like crude oil and naphtha since April 2004. Crude oil prices, which had touched a peak of $50 per barrel, are currently hovering at US $45.6 per barrel.
In a statement, RIL said that India is at a major cost disadvantage as compared to its neighbouring Asian countries on both crude oil and naphtha by $3-4 per barrel and $3 per tonne respectively due to its import duty structure (10% as against nil duty in many Asian countries). At current reduced prices, the effective duty realisation is at a historical - below 10% as compared to the nominal duty rate of 20%.
Reliance has taken these proactive measures to support the domestic industry inspite of the unprecedented rise in the costs of the input materials. RIL has worked for the accelerated development of the domestic industry including several collaborative initiatives on common platforms designed to service processors, end-users, OEMs and consumers, the statement satated.
RIL, along with the industry has made several submissions to the government with a request to reduce duty on the entire crude oil chain (input materials like crude oil, naphtha, fuel oil) from 10% to 5% in the larger interests of the economy and help further in battling inflationary forces.
Fuel oil is a major source of reliable power used by downstream industry today. Reduction in fuel oil duty will help reduce power costs to improve the financial health of downstream sector, RIL said in the statement.