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Sector Trends
19-Feb-15
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Sector
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Soda Ash (Pre-Budget 2015-16): Grant full exemption from Customs duty on imports of membrane elements for water purification plants
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Current status
The alkali industry in India mainly produces soda ash which is used in glass industry, soaps and detergents, silicates and various other chemical industries. The present global Soda Ash capacity is 60 million MTPA. China has the largest capacity at 25 million MTPA or 41.5% of total global capacity, while India's capacity is only 3.1 million tonnes i.e. 5.2%.
Industry expectations
- Full Exemption from Customs duty on imports of membrane elements for water purification plants in Soda Ash industry from 7.5% to nil. These are not manufactured in India as manufacturing is cost intensive and the low demand do not justify investments in manufacturing. The exemption will improve the cost competitiveness of the industry which has pro-actively adopted energy-efficient and eco-friendly practices in the past few years.
- Increase customs duties on imports of soda ash
. Increase BCD from 7.5% to 15% India is facing challenges due to cheap imports from low power cost countries in South, SE Asia and Middle East. In terms of technology, India is second only to Japan in adoption of latest technology by investing substantially. However, the high cost of power renders Indian manufacturing at a comparative disadvantage.
Stocks to watch
Tata Chemicals, GHCL, DCW
Outlook
The industry expects that's its recommendations for the upcoming budget will help in reducing the impact of the cascading duties and cheaper imports on the soda ash manufacturing companies. However, the Union Budget 2015-16 is not expected to bring any big changes for the soda ash industry.
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