Inverted duty structure refers to taxation of inputs at higher rates than finished products.
The country’s plastic exports are expected to grow 20-25 % to $ 12 billion in the current fiscal year on account of favourable market conditions and increasing demand for domestic goods in key destinations such as the US and Europe, PLEXCONCIL Chairman Arvind Goenka said.
The chairman of Plastics Export Promotion Council of India (PLEXCONCIL) also said though the order books of exporters are healthy, government support is needed in certain areas to further push exports as the sector holds huge potential to create jobs.
“In 2021-22, we are expecting a growth of 20-25 % in exports. It should touch $ 12 billion from $ 9.5 billion in 2020-21. During April-May this fiscal year, we exported goods worth about $ 1 billion. Government support will help us in boosting the exports significantly,” he told PTI.
However, he said the sector is facing some challenges like inadequate availability and rising rates of raw material (polymers), increasing shipping freight, container shortage and inverted duty structure due to certain free trade agreements.
Inverted duty structure refers to taxation of inputs at higher rates than finished products that results in build-up of credits and cascading costs.
Thailand and Vietnam, members of ASEAN with which India has a free trade pact, are key players in the sector and they are getting preferential access in the Indian markets due to the agreement, he said.
Goenka said plastic consumption is growing at a faster rate but polymer production is not increasing at that pace due to which, manufacturers are facing “huge” shortage of raw material.
The sector is facing tough competition from China, and support from the government on these issues would help us in enhancing competitiveness of domestic goods in international markets, he said.
China’s annual export from the sector is about $ 70 billion, Goenka said adding global exports stand at about $ one trillion.
The U.S. and Europe account for about 50 % of the country’s total plastic exports.
“We have taken our issues to the government. Government should also soon announce the applicable rates of RoDTEP (Remission of Duties and Taxes on Export Products) for the sector as it is getting delayed now,” Goenka said.
Source: The Hindu