Financial Daily from THE HINDU group of publications
Wednesday, Mar 01, 2006
Financial Daily from THE HINDU group of publications Wednesday, Mar 01, 2006 |
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Opinion
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Chemicals Industry & Economy - Budget No major reaction Alagappan Arunachalam
The chemicals industry has received almost nothing from the Budget. The sole redeeming factor for the industry, which relies much on the economy, appears to be the consistent growth rate. The Finance Minister has proposed a cut in Customs duty on basic inorganic chemicals such as halogens, carbon, hydrogen and sulphur from 15 to 10 per cent. Customs duty has been slashed from 10 to 5 per cent. Petrochemicals appear to have garnered a lot of attention. PVC has also been included in the proposed duty cut from 10 to 5 per cent, which could put pressure on Chemplast Sanmar, DCW and Finolex Industries. On the raw material front, the Customs duty has been reduced on naphtha for manufacture of specified polymers from 5 per cent to nil and on styrene, ethyl vinyl acetate, ethyl dichloride and vinyl chloride monomer from 5 to 2 per cent. The Finance Minister has, however, left excise duty on polymers untouched. The user industry would, however, benefit in the form of lower input costs. Major beneficiaries would be Sintex, VIP Industries and Supreme Industries. The reduction in Customs duty from 15 to 12.5 per cent has reduced import parity rates on caustic soda which have just come of their ten year peak. A re-rating of domestic prices on import parity terms would affect caustic soda majors such as Gujarat Alkalies and Bihar Caustic. However, they have something to cheer about as they still continue to enjoy the benefits of the anti-dumping duty that has been imposed on imports from certain countries, including China. Caustic soda user industries, such as paper and aluminium could heave a sigh of relief, as the cut in Customs duty along with declining prices will benefit them. On the chlorine front the cut is from 15 to 10 per cent. The reduction in Customs duty on soda ash to 12.5 per cent will affect Tata Chemicals and GHCL. The impact, however, will be limited with their recent overseas acquisitions.
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