Industry welcomes Union Budget 2021-22

Industry welcomes Union Budget 2021-22

The Budget scores high in the current environment as the Indian chemical sector continues to provide strong support to the Indian economy

  • By ICN Bureau | February 03, 2021

The Centre has increased the budgetary allocation for the Department of Chemicals and Petrochemicals by 7% from Rs 218.34 crore in 2020-21 to Rs 233.14 crore this year. The budget has allocated Rs 53.73 crore for promotion of petrochemicals and Rs 117.88 for Central Institute of Plastic Engineering and Technology.

Commenting on the Budget 2021-22, consultancy firm EY India stated that  the policies announced in the Budget 2021 should generate demand for various specialty chemicals such as intermediaries or raw materials used for producing active pharmaceutical ingredients, technical textiles chemicals like dyes and intermediaries, colorants and paints, PVC, water treatment chemicals, emission control catalyst, construction chemicals, polycarbonates, TPUs, etc. “Overall, the Budget 2021 scores high in the current environment as the Indian chemical sector continues to provide strong support to the Indian economy and significantly contributes to India’s objective of being self-reliant,” it added.

Industry’s reaction:

Deepak C Mehta, Chairman, FICCI National Chemical Committee and CMD, Deepak Nitrite Ltd

“I congratulate the finance minister for addressing the aspiration of Aatmanirbhar Bharat, though an expansive budget that augurs well for the chemical and petrochemical sector with appropriate custom dutyand impetus to export and growth of the sector.

Government has calibrated customs duty rates on chemicals to encourage domestic value addition and to remove inversions. By changes in basic customs duty in chemicals specifically Carbon Black from 5 % to 7.5%, Bis-phenol A from Nil to 7.5%, Epichlorohydrin from 2.5% to 7.5% as all rates increased to 7.5%, government provides playing field for the benefit of domestic manufacturers. Apart from other items, they have reduced customs duty on Naphta from 4% to 2.5%, to correct inversion.

The specialty chemical sector in India has been largely unfazed by the ongoing Covid-19 slowdown. A changing geopolitical power and rearrangement of global supply chain preference from China to a China Plus one strategy will drive growth.

The Industry is keenly looking forward to the PLI Scheme for Chemicals & Petrochemicals on the lines of the Pharma Sector with a domestic demand growth to $ 300 billion by 2025-2026. The PLI booster would ensure most of this demand is home produced.

The Industry is also looking for infrastructure spending commitments of the government and support for Chemical Parks, PCPIR such as for desalination plants, CETP’s port facilities etc., thereby, ensuring competitive availability and offering a world class infrastructure platform for attracting maximum investment in the Chemical Sector.

We acknowledge the Government is planning to make significant investments in Research Centers.

Incentivizing the private sector for research would double up the country’s ability to be a leader in the Chemical World. Finally, exports need to have substituted the MEIS and other schemes of support by alternate means. In particular with turbulent market situation in the world, this need of level playing field against world players is essential.

We would like to thank once again for the highly appreciable support and continued efforts from Department of Chemicals & Petrochemicals, Ministry of Chemicals and Fertilizers and Ministry of Finance, Government of India.”

R. Mukundan, Managing Director and CEO, Tata Chemicals

“The first budget of the new decade has ensured the right balance of sustainable growth, social equity and long-term competitiveness of the Indian economy.

The proposed step to create more stability in tax regime is a welcome move. This, combined with simplification and a further improvement in the dispute resolution process, will augur well for tax compliance and increase in resource mobilisation.

The impetus in funding towards railways, roadways and ports will go a long way in improving the competitiveness of Indian industry by reducing the cost of logistics.

The continued support of manufacturing with the Productivity Linked Incentive (PLI) Scheme will further strengthen the Atma Nirbhar Bharat Mission to help the country integrate more strongly with the global supply chain. The PLI scheme coupled with duty rationalisation of inputs especially naphtha will bode well for value-added products and speciality chemicals.

Also, the start of the Hydrogen economy is a welcome step.

All in all, a balanced approach to resource mobilisation, stability in taxation and focused sectoral steps to spur manufacturing growth will ensure that we come out of this pandemic stronger and more competitive.”

R S Jalan, MD, GHCL

"The Honorable Finance minister has presented a balanced, mature budget which reasonably addresses the need of the hour. She agreed that yes, there is a huge Fiscal deficit of 9.5% of the GDP but yet, did not seem in a rush to reduce the same by increasing the tax burden for the individual taxpayer or Corporates.  Instead, the Government decided to go the divestment way to make up for the huge fiscal deficit with a clear cut road map on how to do it. Monetization of land and financial assets is a smart way to reduce Fiscal deficit and create a multiplier effect in the economy by boosting private investment. The budget also saw huge increases in allocations towards health, infrastructure and capital expenditure, which is the need of the hour. I also welcomed the proposal for creation of mega-investment textile parks which will create a favorable ecosystem for growth of ancillary industry as well. For the individual taxpayer too, the time limit for reopening of income tax assessment cases was reduced to three years from six years, while for serious tax fraud cases it would be 10 years.

What surprised me, was that there was no mention of an increase in spending on defense given the existing Geo –political scenario. Also, there was not much focus on how the Government plans to implement its proposed policies.  For the textile industry, the increase in duty on imported cotton was also quite a dampener. I would have rather suggested a greater focus on increasing exports of value added products for natural textiles along with manmade textiles. The move to increase duty on solar panels also may prove to be counter intuitive for the renewable energy sector".

Anand Srinivasan, MD, Covestro

"The announcement of the budget by the Honorable Finance Minister in the midst of a pandemic situation has indeed been a very progressive one. The focus on the implementation of various agendas is a clear sign of a robust economic objective for the country. With further inclusion of green initiatives that focus on sustainability and a circular economy will definitely stimulate the economy to be one of the responsible countries across the globe. The budget has aimed to boost the manufacturing sectors by emphasizing the overall well-being of the economy. Calibrated changes in customs duty on certain items will trigger local production and boost manufacturing under Atmanirbhar Bharat. The Government's ambition towards a production-linked-incentive scheme will help in maintaining the momentum across manufacturing sectors. This has potential to be a great move for the chemical industry."

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