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Indian agrochemical manufacturing to take a hit; custom tariff on import of finished product at 10 percent: PMFAI

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12 January 2022, Mumbai: Central Board of Indirect Taxes & Customs (CBIC) released its custom tariff on import of intermediates, raw material and finished product applicable from 1st January 2022. While the tariff on intermediates and raw material is at 10%, the tariff on finished product also being at 10% is a matter of concern for the domestic pesticide industry. 

The tariffs will be a death warrant for Indian manufacturing sector and destroys the vision of Make in India, said Mr. Pradip Dave, President, Pesticide Manufacturers and Formulators Association of India (PMFAI). The domestic manufacturing pesticide industry will be forced to compete with the imported finished product at the same tariffs. 

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CBIC revised customs tariff on intermediates & raw-material (MUPs) under Chapter 29 & 28 from 7.5% to 10%, and left Customs Duty on imports of readymade products (finished products) under Chapter 38 untouched at 10%. The industry body is surprised with the decision as several discussions and explainatory sessions were conducted with the Ministry of Finance and Ministry of Chemicals and Fertilizers.

The industry body mentioned that the revised custom tariffs will encourage Imports of finished products rather than indigenous manufacturing in India. The country has already witnessed surging imports of finished products. As per estimates by CMIE, Ministry of Commerce, imports of Pesticides increased to a staggering 41.2% during the year 2020-21 compared to the domestic production which increased by 11.9%. 

As per the statement released by PMFAI, “The authorities are ignorant of the increasing imports of readymade products, which will lead to closing down of many Indian manufacturing units, particularly MSMEs. Chinese and multi-national companies are aggressively invading Indian Market which is affecting the growth of Indian industries and manufacturing activities in India, contrary to the vision of “Make in India”.”

Finished products are imported without any value addition in terms of manufacturing and employment, which helps supporting investments, infrastructure and job opportunities abroad, rather than in India.

Pesticides Manufacturers & Formulators Association of India (PMFAI) being the largest national association representing Pesticide sector in India, has represented the matter to concerned authorities in Government of India. PMFAI has appealed the authorities to provide equal opportunities to Indian Manufacturing sector by increasing Customs Duty on all imports of Finished products to minimum 25% which falls under Chapter 38.

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