Scientist And Researchers Welcome Rollback Of Import Duty Hike On Lab Chemicals

The government has removed the recent hike on import duty for lab chemicals, restoring it to 10% from 150% after facing severe backlash from scientists and experts. The hike could have “severely” increased costs involved in research and development activities, especially in the pharmaceutical and biotechnology space, according to researchers and scientists.

The new norm is effective Aug. 1.

The new rule will be applied to chemicals if the imported goods are for use in laboratories or for research and development purposes and not sold after import, according to a notification issued by the Central Board of Indirect Taxes and Customs on July 31.

In case of non-compliance with the new norm, the offender will be liable to pay an amount equal to the duty on the quantity of chemicals proven to have not been used for research and development activities, it said.

“It is a welcome setback. If the government had gone ahead with the hike, it would have led to a substantial increase in R&D costs for organisations and manufacturers. It would have had a detrimental effect on the overall R&D ecosystem," said Dr. Debojyoti Dhar, co-founder and director at biotech firm Leucine Rich Bio.

Sudarshan Jain, secretary general at the India Pharmaceutical Alliance, is very happy with the government's decision. "The R&D would have become very expensive with the 150% duty hike," he said.

The roll back of the hike is indeed a welcome move, said Jignesh Ghelani, partner at Economic Laws Practice. "Increasing the BCD 15 times had a direct impact of 1,400% increase in the cost of R&D in relation to imported laboratory chemicals," he said. It would have also had the potential to encourage smuggling and issues of classification, he said.

The basic customs duty rate on lab chemicals classified under HS 9802 00 00 has been increased from 10% to 150%, according to the budget fineprint. The HS 9802 00 00 code has around 40,000 chemicals under it. Up to 95% of the chemicals used in laboratories are among those 40,000 listed chemicals, researchers and scientists said.

The government had announced the scrapping of the duty hike after undenatured ethyl alcohol was imported by mis-declaring it as lab chemicals to get away with the 150% duty.

Since the announcement, scientists and researchers have been raising objections to the new rule and also turning to social media platforms to express their opinions.

The opposition had also cited concerns about the same. The Kerala Pradesh Congress Committee had taken a sarcastic dig at the move on X, formerly Twitter. “Promoting Science and Scientific Temper through Customs Duty by @nsithraman and Co."

University research centres across India saw a series of cancelled work orders following the decision to hike customs duty on laboratory chemicals from 10% to 150%, the Times of India reported. Even organisations funding these research labs had already informed scientists that their budgets were fixed with no room to hike allocations to absorb the additional hike, the report has said.