• Basic Customs Duty on All acyclic hydrocarbons and all cyclic hydrocarbons (other than para-xylene which attracts Nil BCD and styrene which attracts 2% BCD) decreased from 5% or 2.5% to 2.5%.

• Basic Customs Duty on Denatured ethyl alcohol (Ethanol) subject to actual user condition decreased from 5% to 2.5%

• SAD on Orthoxylene for the manufacture of phthalic anhydride subject to actual user condition decreased from 4% to 2%.

• Excise duty -Remnant kerosene, presently available for manufacture of Linear alkyl Benzene [LAB] and heavy alkylate [HA] to N-paraffin. At present, exemption is restricted to manufacturers of LAB and HA.-14% to Nil

• Excise duty on sacks and bags of all plastics is being rationalized at 15%.

• 28.5 lakh hectares will be brought under irrigation under 'Pradhan Mantri Krishi Sinchai Yojana'. Implementation of 89 irrigation projects under AIBP, which have been languishing, will be fast tracked. This will help to irrigate 80.6 lakh hectares. These projects require Rs 17,000 crore next year and Rs 86,500 crore in the next five years. All these measures would give big boost to plastic pipes and thus demand for polymer.

Existing units need up-gradation/installation of new plant and machinery in place of old plant and machinery. Technology up-gradation fund scheme (TUFS) for Plastics industry is needed badly. This will provide loan to units at subsidized rates to Plastics Processors for the purchase of new machinery for up-gradation. The Indian plastics processing and converting industry has large population of older technology machinery and thus does not have the same technological edge to remain competitive in costs and quality compared to our global competitors. The proposed Scheme aims at making available funds to the domestic plastics processing and converting industry for technology up-gradation of existing units as well as to set up new units with state-of-the-art technology so that its viability and competitiveness in the domestic as well as international markets may enhance. There is increasing competition from China and other countries not only in the international market, but also in the domestic market. To meet the challenges the industry is required to become competitive, cost effective and quality oriented. This will make the industry competitive.

• Raise customs duty on poly vinyl chloride (PVC)

Indian import duty on PVC, at 7.5%, is still far lower than that prevailing in comparable economies. This is resulting in very poor margins for domestic manufacturers, leading to a complete disinterest in capacity additions. For instance, the last Greenfield PVC plant was set up in 2009 and in the last 6 years, there has been no other significant investment in creating capacities.

Thus, India is even today excessively reliant on imports to meet its PVC demand, with demand expected to exceed 2.7 mnmt in the current financial year, while capacity is virtually stagnant at 1.4 mnmt. The gap is likely to widen more and more in future years as demand is growing at a CAGR of 10% while no capacity additions are on the anvil. At this rate, domestic downstream processors will find it difficult to secure PVC resin supplies even from international sources in about another 5 years. It is thus imperative for India to add to domestic PVC manufacturing capacity to nurture growth in the downstream sector.

Articles of plastics also attract only 10% as Basic Customs Duty - but it may be pointed out here that several countries do not have any differential between the basic polymer and articles made out of these - for the later have an inherent protection in terms of logistical issues in imports. This move will result in a positive revenue impact of around Rs. 190 crores.

• Reduce import Duty on Naphtha to 2.5% to bring it at par with other petrochemical feedstock.

• Custom duty on LNG/Natural Gas to be brought down to from 5% to 2.5%

• Reduce central Excise Duty on Plastic Polymers and Articles of Plastics be reduced from 12.5% to 8%.

Stock to watch

Supreme Industries, Jain irrigation, Sintex Industries, Time Technoplast, DCW

Union Budget 2016-17 has given big boost to irrigation sector which indirectly will boost demand for plastic pipes. 28.5 lakh hectares will be brought under irrigation under 'Pradhan Mantri Krishi Sinchai Yojana'. Implementation of 89 irrigation projects under AIBP, which have been languishing, will be fast tracked. This will help to irrigate 80.6 lakh hectares. These projects require Rs 17,000 crore next year and Rs 86,500 crore in the next five years.

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