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Expert group calls for naphtha duty cut, phasing out Jute Act

PTI - New Delhi

An expert group on petrochemicals recently recommended doing away with the Jute Packaging Materials Act (JPMA), cut in import duty on naptha and excise duty rationalisation on synthetic fibre and yarns. It its 52 page report presented to chemicals and petrochemicals minister, Mr S S Dhindsa, the Task Force on petrochemicals also recommended that customs duty on capital goods for petrochemicals should be reduced to the 0-5 per cent level as prevailing in other Asian countries.

“We will take up the suggestions made (by the expert group) with other concerned ministries and the Planning Commission to strengthen petrochemical industry, boost exports and facilitate enhanced foreign direct investments,” Mr Dhindsa said.

The Task Force said jute is not used for bagging commodities alone and it must be employed for product innovation while the JPMA should be phased out as it denies consumers the choice of packing material. It said that since India does not have feedstock advantage, therefore, the import duty on naphtha should be brought down to about five per cent as in other Asian countries from the present 10 per cent.

At present 60 per cent petrochemical complexes in India are naphtha based and the remaining are gas based. Relatively high price of naphtha here is partly due to 10 per cent import duty against nil in Taiwan, five per cent in Indonesia and Malaysia and one per cent (Korea). It said an appropriate pricing mechanism must be devised for ‘C2-C3’ fraction feedstock used in production of olefins. The ‘C-2’ fraction pricing mechanism should take into account the low gas prices prevailing in West Asia.