105. India has become a major producer and exporter of chemicals. This industry has shown a healthy growth in the last two years. This is an area in which India can exploit its potential of trained technical manpower and become a leading nation of the world in the production of chemicals. To achieve these objectives, I propose to take the following steps:

• Reduction in the rate of duty on crude oil from 35% to 25%.
• Reduction in the rate of duty on bitumen from 30% to 10%.
• Unification of rates at 10% on petro chemical building blocks such as cumene, toluene and cyclohexane.
• Reduction in the rate of duty on chemicals, both organic and inorganic, from 50% to 40%.

106. Our textile industry employs millions of people. It is necessary to modernise it and provide an environment in which it can grow rapidly. I propose the following measures:

• Reduction in the import duty on rayon grade wood pulp from 25% to 5%.
• Reduction in the import duty on acrylonitrile from 20% to 10%.
• Reduction in the rate of duty on DMT, PTA and MEG from 35% to 25%; however in the case of caprolactum the revised duty will be 30%.
• Reduction in the rate of duty on artificial and synthetic fibres from 45% to 30%.
• Unification of the rates of duty on nylon filament yarn, polyester filament yarn and viscose filament yarn from the existing levels of 45% and 40% at 30%.

107. I also propose a major restructuring of excise duties in the textile sector, extending the benefit of Modvat, to which I shall come a little later. I am confident that with these measures our textile industry will grow from strength to strength in the coming years.

108. Our power plants face a shortage of coal on account of growing demand and better utilisation of installed capacity. I propose to reduce the rate of duty on non-coking coal from 35% to 20%. I also propose reduction of duty on coke from the existing level of 25% to 20%.

109. Our plastics industry is coming of age. I propose a reduction of duty on plastics from 40% to 30%. Further, on articles of plastics I propose a reduction from the existing level of 50% to 40%.

110. In regard to rates of duties on drugs and pharmaceuticals, I propose to retain the zero rate of duty on life saving drugs. I also propose to reduce the rate of duty on all other allopathic medicines from 50% to 40%. In order to make available veterinary drugs commonly used I propose to reduce the rate on specified veterinary drugs from 15% to 10%.

111. There has been a persistent complaint from industry that customs duty on metals is very high and this makes it difficult for downstream industry, especially capital goods, to be competitive. Industry has been demanding that the rate of duty on metals should be brought down drastically. However, realising the need to provide adequate time to our metals industry to adjust itself to global competition, I propose a modest reduction from 35% or 40% at present to a peak rate of 30% on all metals except nickel and aluminium. On unwrought aluminium and unwrought nickel I propose to retain the current level of 10% and 20% respectively. On wrought aluminium I propose to reduce the duty from 25% to 20% and on wrought nickel from 30% to 20%.

112. While I do not wish to tamper with the rate of duty on machinery which stands at 25%, I propose a reduction of duty on signaling and safety equipment for railways, airports, sea ports etc. from the current level of 50% to 25%.

113. The last three years have witnessed a tremendous growth in our electronic industry which has been the result of enterprise as well as the stimulation provided by sharp reduction in customs duties. In order to maintain this trend, I propose the following changes:

• On raw materials, from the existing 15% to 10%
• On components, from 25% to 20%.
• On glass shells for colour TVs, from 30% to 25%.
• On colour picture tubes, from 40% to 30%.
• On computers and computer peripherals, from 40% to 20%.
• Finished goods will continue to attract 50% rate of duty.