LABORATORY CHEMICALS (Syllabus: GS Paper 3 – Sci and Tech)

Context: The Finance Ministry has withdrawn a customs duty hike on imported laboratory chemicals, which was proposed post the Budget, after scientists raised a furore.

Laboratory Chemicals

• About: Imported chemicals, reagents, and enzymes fall under the category of laboratory chemicals and are essential for experimental research across various scientific disciplines.
• Types: These include oxidisers, corrosive acids, and compressed gases used by researchers to conduct experiments and develop new products.
• Usage: Laboratory chemicals play a crucial role outside of research settings, particularly in the medical diagnostics industry.
• Cost and Niche Market: Most laboratory chemicals are niche products that can be relatively expensive.
• Customs Department Definition: The Customs Department defines laboratory chemicals as organic or inorganic substances, whether chemically defined or not, imported in packings not exceeding 500 grams or 500 millilitres, specifically intended for laboratory use.

Issue of Increased Basic Customs Duty

• The Basic Customs Duty (BCD) on these chemicals was silently increased from 10% to 150%, as per Budget 2024-25.
• Increase of cost: There was also a 25% hike on imported plastic components used in laboratories.

Imported Chemicals Necessity

• Lack of Domestic Demand: India's local demand for niche chemicals is insufficient to justify the capital investments needed for their production.
• Replicating Experimental Research: Imported chemicals are crucial for replicating experiments from abroad, requiring precise materials that are often unavailable locally.
• Pharmaceutical and Chemical Manufacturing: Despite being a major manufacturer and exporter, India relies on imports for specific chemicals needed in specialized research and development.