By IANS
New Delhi : A leading industry body has urged the government to keep key petrochemical products outside the purview of the proposed free trade agreement with the Gulf Cooperation Council (GCC), fearing unfair competitive advantage.
Indian manufacturers are at a disadvantage because key inputs like feedstock are available in GCC countries at subsidised prices, the Associated Chambers of Commerce and Industry of India (Assocham) said in a statement issued Friday.
It has urged the government to exclude products like ethylene and linear low-density polyethylene (LLDPE) from the scope of the proposed free trade agreement.
GCC is a customs union comprising Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE).
As a bloc, GCC is India’s third largest trading partner after the European Union and the US, according to latest import statistics available with the commerce ministry.
India is currently negotiating a free trade agreement with GCC.
“Due to unfair advantage on feedstock cost coupled with other cost handicaps faced by Indian industry, there is significant disadvantage vis-à-vis manufacturers in GCC member countries, which is reflected in much higher cost of production in India,” Assocham President Venugopal N. Dhoot said in the statement.
“These governments provide natural gas to their petrochemical industry for using as feedstock at a subsidised price of $0.75 per million British thermal unit (MMBTU), while prevailing prices in the international market are in the range of $15 per MMBTU,” the statement pointed out.
That leads to a significant difference in the average production cost of these petrochemicals in India and GCC countries, the statement said.
“Production cost of ethylene in India works out to $697 per metric tonne (MT) as compared to just $143 per MT in Saudi Arabia. This amply demonstrates that Indian ethylene manufacturers are at a 281 percent cost disadvantage vis-à-vis their Saudi counterparts,” the statement affirmed.
Manufacturers of low-density polyethylene (LDPE), high-density polyethylene (HDPE) and polypropylene (PP) also face similar cost disadvantage with respect to their counterparts in GCC countries, Assocham said.