Industry’s expectations from Union Budget 2022-23

Expects required relief and incentives from the Budget 2022-23 that will accelerate the pace of the growth of industry.

The chemical and petrochemical industry have very high expectations from the Union Budget 2022-23 to be presented by Finance Minister Nirmala Sitharaman on 1 February, 2022.  Industry expects required relief and incentives from the Budget 2022-23 that will accelerate the pace of the growth of industry. ICN collates here the expectations of the industry.

Maulik Mehta, CEO, Deepak Nitrite

"Predictable policies based on sound principles is unique in today's emerging markets so there should be an increased focus on growth in high touch sectors which will uplift those that have been affected the most by the pandemic in the last two years. Focus should be on widening rather than deepening the tax collection process through simplification and this will yield more recurrent benefits rather than more complicated layers.

"One big reason companies are afraid to invest in India as policies for attracting investment are great but policies make it difficult to leave India are onerous so the companies are more concerned with the risk rather than the reward of the Indian ecosystem. Government needs to incentivise apprenticeship for high contract but technical jobs like mechanics, drivers, technicians, hotels & restaurant staff, manufacturing, etc. as manufacturing offers the maximum bang for a buck for accelerating GDP growth and employment at the same time."

Rahul Tikoo, Managing Director, Huntsman India

"Last year, the specialty chemicals industry was amongst few sectors that successfully navigated through the Covid-19 induced slowdown. We expect that the industry will continue to grow this year led by sustained growth through fast urbanization, evolving consumption patterns, along with increasing per capita income. Recognizing the potential of this sector, the government has already outlined a strategy in line with its call for an 'Aatmanirbhar Bharat', and we hope that efforts to improve the competitiveness of the industry shall continue to be on the economic agenda. All policy initiatives should be aimed at establishing India as a differentiated global manufacturing hub."

Ketan Sablok, Group Chief Financial Officer, Rossari Biotech

"Considering that the chemical industry is a critical and integral part of the growing Indian economy and presents enormous opportunities of attracting investment and creating jobs in the near future, the government’s initiative to sanction PLI Scheme for chemical manufacturers will help us convert challenges to opportunities, especially in view of China+1 strategy of the western chemical players. Extending the PLI Scheme for value-added chemicals will bring in new projects, realign the supply chain from China to India thus making India a major chemical manufacturing hub globally.

"Considering the textile industry imports a large quantity of Siloxanes (silicone softeners used in textiles), BCD (Basic Customs Duty) reduction from the current 7.5% to 5% will go a long way to support and sustain the local textile industry in comparison to our neighboring countries like Bangladesh that currently have the competitive edge.

"Lastly, while domestic production receives a boost from the government, it is essential to also set up a good base for exporting and bringing in more revenue to the country. Hence, we seek a budgetary allocation in the Remission of Duties and Taxes on Exported Products (RoDTEP) Scheme so that the chemical sector can also be put under the purview of the scheme. As a result, this would boost exports by making Indian products more viable and appealing to international buyers. In line with this, we look forward to a rationalization of duty structure (with nil or low rate on feedstocks and basic building blocks) as the duty could be higher for certain intermediates and further higher for finished chemicals. This ladder-up approach for the duty structure will truly help India become more competitive in the global specialty chemicals market." 

Neeraj Jain, Chief Financial Officer, Cosmo Films

"We think the government should now include the packaging sector under the PLI scheme and the additional deduction for the companies who make investments in the Capex should be reintroduced by the government. To give momentum to our industry, the government should reduce or nullify custom duty on Polypropylene. We also expect the budget to focus on exempting SEZ's from paying MAT and the benefit of the RoDTEP scheme as it should also be extended to the SEZ & AA license. Last, but not least, the government should extend the weighted deduction for R&D till 31st March 2025 as companies need to invest heavily in the development of R&D for developing new products and by giving the weighted deduction the company will be able to invest more into R&D."

Anil Gupta, MD, Krishna Antioxidants

"The budget of FY22 should prioritize investment in infrastructure and provide incentives for investment in solar energy to promote sustainable use of resources. Government should encourage innovation and promote Make in India considering standardized operating procedures for investments in R&D and new product development.

"Focus should be on ease of compliance and formalization over GST and taxation, prioritizing extended credit facilities to MSMEs to provide stimulus to the chemical industry, and providing subsidies for capacity expansion and promoting employment. We expect the budget of FY22 to aid easy access to better infrastructure that will allow us to increase the number of exports and import substitution to further develop the chemical industry."

ICRA

"The industry has been demanding that crude oil, natural gas, and petroleum products be brought under the GST to enable free flow of credit and avoid stranded taxes. To promote the use of natural gas as fuel, Liquified Natural Gas (LNG) imports should be exempt from customs duty as crude attracts nil duty while LNG attracts 2.5% duty.”