The Alkali Manufacturers Association of India (AMAI) has sought a level playing field from the government by way of increase in customs duties on caustic soda and soda ash imports, a GST structure for electricity taxes, and the imposition of export duty on salt.
The AMAI, which represents the ₹26,000-crore alkali and chloro-vinyl industries employing two lakh people in India, has requested the Centre to increase customs duties on imports of caustic soda and soda ash. They also requested an increase in the custom duty of poly-vinyl chloride (PVC) from the current level of 7.5 per cent to 12.5 per cent, to partly offset the disadvantages suffered by domestic producers.
The demand for caustic soda has been growing at about 5 per cent CAGR in the last four years, and for soda ash at over 7 per cent. Though there is sufficient domestic capacity for producing caustic soda and soda ash, capacity utilisation is low due to cheap imports.
“In 2017-18, India imported 4.47 lakh tonnes of caustic soda for a value of ₹1,534 crore. The domestic industry has the capacity to meet this demand. The average capacity utilisation of the Indian alkali manufacturers in the last five years is about 82 per cent. We can increase this to at least 95 per cent. But power costs are prohibitive,” said K Srinivasan, Secretary General, AMAI.
Caustic soda manufacturing is power-intensive. The industry has invested in setting up captive power plants, as grid power is insufficient to meet its requirements. However, the duties and cess imposed by State governments largely offset the advantages of captive power plants.
“We have requested the Centre to bring electricity duties and cess under the GST for input tax credit. In most of the industries, power cost is not more than 10 per cent. But for us, it is 55-60 per cent. But providing us with the input tax credit, there will be a level playing field for us and we can be more competitive and fight global players,” P K Gera, MD, Gujarat Alkali & Chemicals Ltd, told BusinessLine .
PVC demand has been growing at 8-9 per cent (CAGR) in India the last few years. However, due to inadequate domestic capacity, demand is increasingly met through imports.
The AMAI has requested for full exemption from customs duties on imports of feedstock EDC and VCM in order to help the industry add fresh capacity and thereby cut imports.
The industry, which is the largest consumer of salt, has also demanded the imposition of export duty on it to ensure availability for domestic players.