Monday, February 29, 2016
Chemicals: Agro chemicals to benefit from Crop Insurance Scheme
Budget Provisions
  • Basic Customs Duty on Electrolysers, membranes and their parts required by caustic soda / potash unit using membrane cell technology decreased from 2.5% to Nil

None of these are manufactured in India (as manufacturing is cost intensive and the low demand does not justify investments in manufacturing). The exemption will improve the cost competitiveness of the industry who have invested nearly Rs.5,000 crore in the past ten years to convert to energyefficient and eco-friendly membrane cell technology for caustic soda production

  • BCD on all acyclic hydrocarbons and all cyclic hydrocarbons [other than para- xylene which attracts Nil BCD and styrene which attracts 2% BCD] is rationalized.
  • BCD on denatured ethyl alcohol (Ethanol) being reduced from 5% to 2.5%, subject to actual user condition.
  • SAD on Orthoxylene, being reduced, for the manufacture of phthalic anhydride subject to actual user condition.
  • Agro chemicals are poised to benefit from on crop insurance scheme announcement. Finance Minister (FM) Arun Jaitley has allocated Rs 5,500 crore for crop insurance scheme.
  • Excise duty on physical mixture of fertilizers, made out of chemical fertilizers on which duty of excise has been paid, by Co-operative Societies, holding certificate of manufacture for mixture of fertilizers under the Fertilizer Control Order 1985, for supply to the members of such Co- operative Societies, being exempted

Stock to watch

Insecticides India, PI Industries, UPL, BASF India, Clariant Chemicals

Outlook

Union Budget 2016-17 has decreased basic Customs Duty on Electrolysers, membranes and their parts required by caustic soda / potash unit using membrane cell technology from 2.5% to Nil. None of these are manufactured in India (as manufacturing is cost intensive and the low demands do not justify investments in manufacturing). The exemption will improve the cost competitiveness of the industry who have invested nearly Rs.5000 crore in the past ten years to convert to energy efficient and eco-friendly membrane cell technology for caustic soda production. Incentivising manufacturing by granting full exemption from customs duties on imports of electrolysers and their spares/parts will give recognition to the initiative shown by the domestic industry in adopting Green Technology and also improve their cost competitiveness.

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