BCD increase on laboratory chemicals to hit R&D efforts

The Central government’s decision to increase the basic customs duty on certain laboratory chemicals from 10% to 150% in the just announced Budget 2024-25 may have an adverse impact on India’s Research and Development (R&D) efforts, scientists fear.

The government decision covers all chemicals, organic or inorganic, whether or not chemically defined, imported in packing not exceeding 500 gms or 500 millilitres and which can be identified with reference to the purity, markings or other features to show them to be meant for use solely as laboratory chemicals.

The move is seen as the government’s response to the sharp increase in the import of these specific chemicals in the last five years. According to Commerce Ministry database, the value of lab chemicals was $84.68 million in 2023-24, up from $5.72 million in 2018-19. The import of these chemicals grew steadily during this period and was $7.86 million in 2019-20, $14.06 in 2020-21, $24.2 million in 2021-22 and $51.29 in 2022-23. The main source of import in 2023-24 was USA ($29.63 million), Germany ($20.47 million) and China ($10.41 million).

In a post on social media platform X, Dr Anurag Agrawal, former director of Institute of Genomics and Integrative Biology, a national laboratory of Council of Scientific and Industrial Research (CSIR), said the move will be extremely damaging to R&D in India. He stated that he hoped to see a rollback on this change and wanted the various science departments of the Central government – Department of Biotechnology, Department of Science and Technology and the CSIR – to take the lead in getting this done. 

In his comments on X, a scientist wondered whether funding agencies will provide more funds to match the extra costs. Another person felt that the government decision will hit small labs and state university labs very hard.

The Finance Bill had stated that the changes in the customs duty will come into effect from July 24 through a declaration under the Provisional Collection of Taxes Act, 2023.

Incidentally, roasted nuts and seeds and areca nuts are some of the other items that saw a similar treatment with an increase in customs duty to 150% from existing 30%.