The Union Finance and Corporate Affairs Minister, Nirmala Sitharaman while presenting the Union Budget 2021-22 on 1st February 1, 2021, announced many key initiatives in the chemical sector to boost domestic manufacturing and exports.

Niramala Sitharaman said that the government has decided to calibrate customs duty rates on chemicals to encourage domestic value addition and to remove inversions. In good news for the petrochemical industry, Budget 2021 mentions the reduction of customs duty on Naphtha from 4% to 2.5% to correct inversion.

In a slew of initiatives for the natural gas and petroleum sector, the Finance Minister announced that Ujjwala Scheme, which has already benefited 8 crore households, will be extended to cover 1 crore more beneficiaries.

100 more districts will be being added to the City Gas Distribution Network in the next three years. A gas pipeline project will be taken up in the Union Territory of Jammu and Kashmir. An Independent Gas Transport System Operator will be set up for facilitation and coordination of booking of common carrier capacity in all natural gas pipelines on a non-discriminatory open access basis.

Among the core infrastructure assets that will be rolled out under the Asset Monetization Programme include Oil and Gas pipelines of GAIL (India) Limited, Indian Oil Corporation Limited (IOCL) and Hindustan Petroleum Corporation Limited (HPCL).

The Finance Minister, however, announced the withdrawal of end-use based concession on denatured ethyl alcohol. Currently, rates are being uniformly calibrated to 15% on items like maize bran, rice bran oil cake and animal feed additives.

Acknowledging that solar energy has huge promise for India, the Finance Minister pointed out that to build up domestic capacity, the government will soon notify a phased manufacturing plan for solar cells and solar panels.

“At present, to encourage domestic production, we are raising duty on solar inverters from 5% to 20%, and on solar lanterns from 5% to 15%,” added Sitharaman.

To give a further boost to the non-conventional energy sector, the Minister has proposed to provide an additional capital infusion of Rs. 1,000 crore to Solar Energy Corporation of India and Rs. 1,500 crore to the Indian Renewable Energy Development Agency.

For a green and sustainable future, the Finance Minister also proposed to launch a comprehensive National Hydrogen Energy Mission in 2021-22 for generating hydrogen from green power sources fulfilling the announcement made by the Prime Minister in November 2020.

In a quite unprecedented move in the entire history of biopharma research and development of the country, a massive Rs. 35,000 crore fund has been allocated for COVID-19 vaccines.


Sitharaman expressed her gratitude for the strength and rigour of efforts displayed by the Indian scientists. She stated that India has two vaccines available and has begun medically safeguarding not only her own citizens against COVID-19 but also those of 100 or more countries.

“It is an added comfort to know that two or more vaccines are also expected soon. I am committed to provide further funds if required,” the Finance Minister further said.

In addition, the Pneumococcal Vaccine, a ‘Made in India’ product, which is presently limited to only 5 states, will be rolled out across the country. This will avert more than 50,000 child deaths annually, the Finance Minister informed during the Budget speech.

The textiles sector that generates employment and contributes significantly to the economy also got attention in this year’s budget. Stressing on the need to rationalize duties on raw material inputs to manmade textiles, added Sitharaman.

“We are now bringing nylon chains on par with polyester and other man-made fibers. We are uniformly reducing 35 the BCD rates on caprolactam, nylon chips, and nylon fiber & yarn to 5%. This will help the textile industry; Micro, Small and Medium Enterprises (MSMEs); and exports, too,” commented Sitharaman.

The voluntary vehicle scrapping policy forms a crucial part of the Union Budget to phase out old and unfit vehicles. This will help in encouraging fuel-efficient, environment-friendly vehicles, thereby reducing vehicular pollution and oil import bill. Vehicles would undergo fitness tests in automated fitness centres after 20 years in the case of personal vehicles and after 15 years in the case of commercial vehicles. Details of the scheme will be separately shared by the Ministry, the Finance Minister announced.