Both the steel and petrochemical sectors have urged the Indian government to increase import duties to safeguard domestic industries from growing competition, particularly from China.

The Petrochemicals and Plastic Committee of the Federation of Indian Chambers of Commerce and Industry (FICCI) has written to the Ministry of Chemicals and Fertilizers, seeking a hike in customs duty on polypropylene and polyethylene from 7.5% to 12.5%. These materials are crucial for various sectors like automobiles, packaging, and construction.

India currently faces a shortage of petrochemicals, particularly polypropylene and polyethylene. Based on the planned increases in production capacity, it's estimated that the shortfall of these essential materials will reach a significant 12 million tonnes per year by 2030. At current market prices, this translates to a deficit of approximately $12 billion.

FICCI emphasized that while India faces a significant deficit in petrochemicals, China is rapidly expanding its production capacity and becoming a major exporter. This, coupled with the cyclical nature of the domestic industry and the availability of cheaper feedstock in other import locations, poses a serious threat to Indian producers.

"The current imports of $101 billion of chemicals and petrochemicals present a huge opportunity for India to decrease our import bills and aim for self-sufficiency," the association stated.

Similarly, the steel ministry has recommended doubling the basic customs duty on imported finished steel products from 7.5% to 15% in the upcoming Union Budget. This move is driven by a surge in cheaper imports, particularly from China, which now constitutes 32% of India's total steel imports.

Both the industries have highlighted the negative impact of low duties. According to them, an increased volume of import threatens the profitability and viability of domestic producers. They pointed out that lower import duties have a negative sentiment amongst the domestic manufacturers. It also adversely affects foreign exchange outflow as the unnecessary imports contribute to a widening current account deficit.

The steel ministry argues that a higher import duty will create a more level playing field for domestic producers, enabling them to compete more effectively. This is seen as crucial for maintaining the competitiveness and profitability of the Indian steel industry.

While acknowledging the potential for a marginal increase in end-product prices due to higher import duties, both sectors believe that the long-term benefits to the domestic economy, including job creation and self-reliance, outweigh these concerns.

The Ministry of Finance is currently reviewing these proposals. The upcoming Union Budget will determine whether these recommendations will be implemented, shaping the future of both the steel and petrochemical sectors in India.