The Indian Chemical Council (ICC) has called for hike in the peak import duty on chemical products in India saying a low duty level is against a scenario of rising costs of finance, fuels and power.

Forwarding its pre-budget memorandum for 2011-12 to the Department of Chemicals and Petrochemicals (DCPC), the ICC said the peak import duty on chemical products in India at 7.5 per cent ad valorem is at one of the lowest levels in the world.

It said it wants the duty level to be increased to 12.5 per cent ad valorem in the forthcoming Union budget.

It also said that the current import duty level is well below India?s bound rates under the WTO.

According to ICC, the year 2010 saw slow down in new investments in chemical industry in India.

"When we go into 2011-12, the current trends in rupee appreciation indicate further appreciation likely in 2011 as per figures by Financial Forecast Centre, Houston.

"This will cause the landed cost of imported chemicals to drop by 5.12 per cent in rupee terms," the ICC said.

While this rupee appreciation will bring the cost of imported chemicals down, the conversion costs of chemical industry (from raw materials to downstream chemicals) like cost of finance, fuels, power, manpower etc have shown significant increases and these costs continue to rise further, it said.

"The inflation rate in India (of 9.7 per cent as reported in October 2010) which has been a matter of concern all through the year has caused manpower costs to rise significantly in recent times and the trend is likely to continue unabated."

Besides this, the ICC said that with the rising expectations of skilled manpower of salary and benefits in an era of globalisation, the impact has got compounded and manpower costs of major corporates in the manufacturing sector have been increasing at double digit rates.

"In view of the hardship, we request the government to increase the peak import duty on chemical from 7.5 per cent ad valorem to 12.5 per cent ad valorem in the forthcoming Union budget," the ICC told DCPC.