India’s chemical industry is a powerhouse that touches nearly every aspect of modern life. Contributing 7% to the country’s GDP, this diverse sector is the sixth largest globally. As the chemical manufacturing sector continues to expand, it seeks strategic support from the upcoming budget to fuel the next phase of industrial growth. As budget discussions unfold, the chemical industry – spanning bulk and specialty chemicals, agrochemicals, Pharmaceuticals and more – anticipates policies and investments that could shape its trajectory in the coming years, potentially redefining not just India’s industrial landscape, but its role in the global chemical market too. 

With respect to this, let us explore the key areas where budget allocations and policy decisions can significantly impact the chemical manufacturing landscape. These insights offer a nuanced perspective to drive growth, innovation and sustainability in the sector. 

Nurturing Innovation and Growth

The chemical manufacturing sector anticipates supportive government policies and incentives that aid research and development, innovation into complex chemistries and the adoption of green technologies. This includes tax benefits, grants, or subsidies aimed at enhancing manufacturing capabilities in   pharmaceuticals, specialty chemicals and agrochemicals among others. The sector opines that the government should consider RoDTEP (Remission of Duties and Taxes on Export Products) Scheme enhancement in the export driven chemical industry. Furthermore, incentives for import substitution will support faster setup of made-in-India raw material/intermediate supply chain and take initial steps towards making the industry self-reliant.

Strengthening the Backbone: Infrastructure and Logistics

Investments in infrastructure are critically important for the chemicals sector in the upcoming budget. Improved transportation and logistics networks are crucial for the efficient movement of raw materials and finished goods between manufacturing clusters and ports. Enhanced infrastructure can reduce costs, minimize delays, and ensure timely delivery, which is vital for maintaining the sector’s competitiveness. By focusing on developing robust infrastructure, the government can help streamline operations, boost productivity, and support the overall growth of the industry.

Navigating the Regulatory Environment

Strengthening the regulatory environment for pharmaceutical chemicals, Specialty chemicals and crop protection chemicals tends to be a crucial focus for the chemical manufacturing industry. This includes measures to streamline approval processes, particularly for exporting new products/molecules/chemistry, enhance compliance mechanisms and improve the overall quality and safety standards. Such developments can have a direct impact on chemical manufacturers by providing a conducive business environment. Additionally, fast-tracking regulatory approvals for local players can provide them with early mover advantage in domestic markets. By fostering a more conducive business environment through these regulatory improvements, the government can support the sector’s growth and competitiveness both domestically and internationally.

Skill Development Initiatives

A skilled workforce is crucial for driving growth, rapid technological innovation, quality improvements, thereby advancing the overall sectoral growth. The upcoming budget plays a pivotal role as it can allocate funds for training and upskilling programs tailored to the needs of the industry, particularly in areas such as Pharmaceutical, crop protection & specialty chemicals. Establishing industry-oriented upskilling centers within chemical manufacturing clusters can accelerate the sector’s progress by ensuring that workers are equipped with the latest knowledge and techniques. A well-trained workforce enhances operational efficiency, fosters innovation, and maintains high standards of safety and quality — all of which are essential for the sector to thrive in a competitive global market.

Anti-dumping Measures

The budget must include provisions to expand the scope of anti-dumping measures and cover a wider range of chemical products that are being imported at less than cost prices   especially in terms of finished products/APIs. Moreover, the process of registration of Active Pharmaceutical Ingredients (APIs) for foreign companies should be made in line with global standards and their manufacturing facilities should be inspected prior to granting them registrations.  This will provide greater protection to domestic manufacturers and prevent unfair competition from foreign countries that might introduce cheaper products in the Indian market. Furthermore, resources must be allocated to enhance the enforcement of anti-dumping measures, including increased inspections, investigations, detailed registration and penalties for non-compliance. 

Embracing Sustainability: Green Technologies and Supply Chain

As the conversation turns to the future, sustainability emerges as a dominant theme. Tax incentives and subsidies for investing in environmental-friendly technologies are highly anticipated. This includes funding for R&D in sustainable manufacturing processes, adoption of energy-efficient equipment, and greener chemistries to develop sustainable alternatives for hazardous substances and processes. This in turn requires supporting academic institutions, research organizations, and industry collaborations to find greener and circular economic solutions for chemical production.  

Furthermore, promoting sustainable supply chain practices is equally essential for the long-term growth and environmental responsibility of the chemical manufacturing sector. The upcoming budget must encourage these practices by offering tax benefits or preferences to companies that source raw materials from environmentally responsible suppliers and engage in fair-trade practices. Incentivizing sustainability in the supply chain can help reduce the industry’s environmental footprint, foster more efficient use of resources, and drive the sector towards an eco-friendlier and socially responsible future.

Catalyzing Growth

While the specifics of the budget remain to be seen, one thing is certain: the chemical industry is poised for growth. The upcoming budget can be the catalyst that propels the sector to new heights. With the right mix of policies and investments, we could see a surge in innovation in complex chemistries, boost in manufacturing capabilities, and strengthening of India’s position in the global chemical market.