The Hindu : Tamil Nadu News : `Reduce duty on plastic raw materials'

Online edition of India's National Newspaper
Saturday, Jul 24, 2004

Tamil Nadu

Tamil Nadu

`Reduce duty on plastic raw materials'

By Our Special Correspondent

CHENNAI, JULY 23. The Tamilnadu Plastics Manufacturers' Association (TAPMA) has appealed to the Union Government to reduce the basic customs duty on major plastic raw materials to 10 per cent from 20 per cent in view of the sharp increase in their prices effected by domestic manufacturers in the past two years.

The employment of thousands of people and the future of 7,000 plastic processing industries in the State, including a vast majority in the small and tiny sectors, are at stake as a result of the periodic price increases effected by the domestic manufacturers of raw material, the TAPMA president, C.K. Sekar, said today.

Alleging informal cartelisation by the four manufacturers — Reliance Industries, Indian Petrochemical Industries Corporation (IPCL), which had been disinvested by the Centre in favour of Reliance, Haldia Petrochemicals in the joint sector and Gas Authority of India Ltd (GAIL) — Mr. Sekar told a press conference here that the manufacturers were taking advantage of the restricted availability of the material following shutdown of installed capacity in the European Union (EU).

Mr. Sekar, and a former president of the association, B. Swaminathan, said the Centre had failed to set up a regulatory body for plastic raw material as promised by the erstwhile National Democratic Alliance (NDA) Government at the time of disinvestment of the Government's majority stake in the IPCL.

Malaysian model

He said in case the basic customs duty was not reduced, the Government could consider adopting a model in operation in Malaysia whereby the import duty on major raw materials was automatically — and inversely — related to the import price.

Such an arrangement would ensure that there was no fall in revenue to the exchequer and at the same time prices were kept in check for domestic consumers.

The TAPMA leaders regretted that the Tamil Nadu Government had failed to grant setoff of entry tax paid on two major plastic raw materials to manufacturers (as distinct from traders), with the result that the input costs for processors in the State became steeper at a time when they were finding it difficult to cope with the rise in the prices of the materials.

They said the high power tariff in the State was among factors that caused hardships to the processors because the latter were not in a position to pass on the entire cost burden to buyers.

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