Fragrance industry urges rethink on India COVID-19 import tax

Fragrance manufacturers have urged the Indian government to rethink a proposed COVID-19 import tax that would add a 15 per cent levy to imports.

Michael Carlos, Chair of the Fragrance Committee of the Federation of Indian Chambers of Commerce & Industry (FICCI) and IFRA Chairman Emeritus, wrote to Mr P Raghavendra Rao, Secretary for Chemicals & Petrochemicals at the Indian Ministry of Chemicals & Fertilizers, to outline concerns about the new tax.

Michael Carlos outlined how fragrance manufacturing, as part of the chemical industry, is recognized as a key element of the supply chain for essential items, and the value the industry puts on business in India and contributing to India's economic development.

However, the letter states that the proposed COVID-19 import tax - an increment of 15 per cent on all imports coming into India, including chemicals, could disrupt India's manufacturing value chain through higher costs and creating less availability of materials (raw ingredients, building block chemicals or specialty chemicals) hence pushing up pricing of finished goods. 

With demand for fragrance compounds falling due to COVID-19, and resulting drops in production and employment, the future development of the industry will depend substantially on policy measures taken by the government, says the letter. 

The letter also highlights the essential role of the fragrance industry in the manufacturing of essential components for sanitary, hygiene and disinfecting products (as well as hydroalcoholic gels), and the importance of India as a sourcing hub for the global fragrance industry.

As there is an interdependency between India and other markets, a multilateral trade approach would be the most impactful way to support economic growth for this sector, says Michael Carlos.