Takeaways From Union Budget 2020-21 for Indian Chemical Industry

In what was pitted as a ‘Do or Die’ budget, Nirmala Sitharaman, the Honorable Finance Minister of India, had her task cut out from the very beginning. While most sectors were hopeful of a budget that would accelerate demand in domestic consumption, the same was not the case with the chemical industry in India. This is because the Indian chemical industry unlike other sectors of the economy has performed well despite the economic slowdown.

But yet industry leaders were hopeful of a budget that would further strengthen its stronghold in the domestic and international landscape. 

Let’s look at some of the key takeaways or the Indian chemical industry from budget 2020:

1. Higher Customs Duty on Import Chemicals

Custom duty on industrial chemicals will increase the post-budget announcement. The move is aimed to curb the import of chemicals from China. If you have been importing industrial chemicals, you can now do so using an online b2b platform for chemicals. Find industrial chemical vendors, request price quotes and buy chemicals at the best price.

●       BCD on Propane, butane increased to 10% (previously 5%)

2. No Anti-Dumping Duty on PTA Import

As a major boost to the textile industry, anti-dumping duty on the import of Purified Terephthalic Acid was revoked. Until last year anti-dumping duty of USD 78.28 per tonne was levied on the chemical. Chemical suppliers import this chemical from China, Taiwan, Iran, Indonesia, Malaysia, South Korea, and Thailand.

3. Emphasis on Balanced Use of Fertilizers

In what is seen as a major shift in policy, the Finance Minister emphasized the need to focus on zero-budget farming. This means a major cut back on the use of fertilizers and significant changes in farmer incentives. The decision is aimed at reducing the excessive use of chemical fertilizers.

●       BCD on Phosphoric acid used in fertilizer manufacturing increased to 20% (previously 5%)

4. Dividend Distribution Tax Removed

Previously the Dividend Distribution Tax was levied on the dividend paid by Indian companies to company investors including foreign investors. The Union budget 2020 has removed Dividend Distribution Tax which means it would benefit investors and attract greater investment in Indian companies including those in the chemical sector.

The budget is seen as a tonic to the slowing economy and projects a GDP growth of 10 percent in 2020-21. While many experts call this estimate optimistic if achieved it will only accelerate the growth of the Indian chemical industry which remains the primary feed-stock for other industries including manufacturing which was a major focal point of Union Budget 2020-21.