Indian market sources informed SSESSMENTS.COM that resin makers in the country were in talks with the government to introduce an additional duty of 15% on some petrochemical imports that is planned to be valid from May 1, 2020, to March 31, 2021. Many market participants referred to this proposed import tax as the COVID-19 duty.
According to the Basic Chemicals, Cosmetics & Dyes Export Promotion Council (Chemexcil), the duty is aimed to protect the domestic industry from surging imports amid the coronavirus pandemic. SSESSMENTS.COM noted that that the plan was still a stage of consideration and no decision has been made. Another market participant noted that Chemexcil had been notified about the import tax last week. The source also added that the industry group had recommended the government to refund all export duties and taxes until June 2020.
The proposed COVID-19 duty will be applied on top of existing import taxes and include all chemicals and petrochemicals imported by India. However, another letter signals exemptions for ethylene, ethylene dichloride (EDC), vinyl chloride monomer (VCM), and paraxylene (PX). The implementation of the new tax will likely affect Indian importers and distributors. Domestic importers are expected to pass on the extra 15% duty to end-users.
It remains unclear whether the tax will include styrene monomer (SM). As SSESSMENTS.COM noted, India depends wholly on SM imports for its downstream polystyrene, expandable polystyrene, acrylonitrile butadiene styrene, styrene-butadiene rubber, and unsaturated polyester resin productions. Indian SM buyers are already facing mounting pressure from their inventories bought at previously higher costs, while their production has been shut since the lockdown started on March 25.
India is also a net importer of purified terephthalic acid (PTA) and mono-ethylene glycol (MEG). Chinese and Taiwanese PTA producers said they expect a limited impact from the tax, citing India’s recent decision to remove ADDs on PTA in February to support its polyester industry. In December 2019, India launched an ADD investigation on MEG, but Middle Eastern producers said they had not been officially notified regarding the tax.
