University research centres across India are grappling with the fallout from the government’s recent decision to increase customs duty on laboratory chemicals from 10% to 150%. This substantial hike, announced in the latest Budget, has significantly disrupted research budgets at premier laboratories, leading to a wave of cancelled work orders.
This development affects all research labs, except those focused on physics and mathematics, which rely on chemicals of international standards from certified suppliers. Funding agencies have informed scientists that there will be no additional allocations to cover the increased duty on imported materials. This creates a challenging scenario for many research facilities. “For my lab, which works in the field of biology and is considered medium-sized, the annual expenditure on chemicals is about Rs 45-50 lakh,” said a faculty member. “With the new customs duty, our tax burden would rise to Rs 1 crore, resulting in a total bill of Rs 1.5 crore.” The fine print of the Budget reveals that the basic customs duty (BCD) rate on lab chemicals classified under HS 9802 00 00 has surged from 10% to 150%. This code encompasses approximately 40,000 different types of chemicals, which constitute 90-95% of the chemicals used in these labs.
A senior scientist highlighted the essential nature of these chemicals: “Even for the most basic experiments, we need chemicals like salts of sodium, potassium, magnesium, and buffers. For growing cells, we require media, which in turn needs chemicals. These materials must meet uniform standards and be procured from certified suppliers to ensure experiments are replicable worldwide.” For multidisciplinary institutes like IITs, chemicals represent a significant portion of their annual research and development budgets, with some estimating it to be 25%. In specialised labs dealing with cellular and microbiology, the expenditure on chemicals is even higher. Due to the steep customs duty increase, a purchase order previously pegged at Rs 1.1 lakh (inclusive of tax) will now cost Rs 2.5 lakh, with Rs 1 lakh for chemicals and Rs 1.5 lakh for tax. A communication from a top lab to an Indian scientist stated, “Effective July 24, 2024, customs duty on lab chemicals has been revised, impacting many products we will be shipping…we’re liaising with various government authorities to understand the implications.”
Scientists argue that the only viable solution is to exempt academic institutes and labs from this heavy tax. “They are destroying the research culture in the country with their thoughtless actions,” commented a senior Indian researcher, referring to the cumulative burdens of GST, GeM (government e-marketplace), GTE (global tender enquiry), and GFR (general finance rules).
