MSME-dominated plastic industry’s body Plexconcil (Plastics Export Promotion Council), under the Department of Commerce, in its budget expectations has urged the government to renegotiate the India-ASEAN FTA (free trade agreement) imposing BCD (basic customs duty) of 10-15 per cent on import of value-added plastics from 5-10 per cent.
“Value added plastics products incur a mere 5-10 per cent duty when imported under the India-ASEAN Free Trade Agreement (FTA), as opposed to the 10-15 per cent Most Favored Nation (MFN) rates. Unfortunately, partner countries in ASEAN do not reciprocate this advantageous treatment regarding India’s plastics exports,” the council said. \
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As a result, the India-ASEAN FTA does not benefit the plastics processing sector, as the preferential rates for importing value-added plastics from ASEAN are detrimental to the domestic plastics processing industry, it noted.
Speaking on India-ASEAN FTA, Hemant Minocha, Chairman, Plexconcil, which represents over 3,000 exporters, said, “While the import duty on polymers stands at 7.5 per cent, the ASEAN arrangement offers lower rates of 5 per cent for certain polymers. However, the Cost, Insurance, and Freight (CIF) rates provided by ASEAN-based producers are higher for Indian importers than that extended to other countries.”
“This discrepancy eliminates any potential benefits for Indian importers, with the advantage instead being retained by the suppliers. Imports of value-added plastics from ASEAN are valued at a little over $800 million. Increase in import duty from 5 per cent to 15 per cent could bring additional revenue of $80 million,” he said.
The council also asked for increasing BCD on value-added imports from 10 per cent to 15 per cent to benefit the domestic plastic processing industry, which sustains approximately 5 million employees throughout its value chain.
According to the council, the domestic sector currently faces minimal profits, hindering expansion and capacity enhancement reinvestment. To boost exports, diminish imports of value-added plastics, and foster growth, it is imperative to augment the processing capacity of plastics, it noted.
“The expected increase in revenue is substantial. In the fiscal year 2022-23, value-added plastics imports amounted to $7 billion. A 5 per cent incremental rise in customs duty would translate to a revenue surge of $350 million, providing a notable boost to government revenue,” said Sribash Mohapatra, Executive Director, Plexconcil.
Additionally, import substitution has been pegged at approximately Rs 37,500 crores and increasing BCD will drive the industry’s goals to replace cheaper imports with quality products that are made in India and further drive the economy, Mohapatra said.
During November 2023, India exported $892 million plastics, lower by 5.6 per cent from $945 million in November 2022. Cumulative value of plastics export during April 2023 – November 2023 was $7,405 million as against $8,177 million during the same period last year, registering a decline of 9.4 per cent, as per Plexconcil.