The Union Budget 2023-24 proposed to exempt basic customs duty on denatured ethyl alcohol to support the Ethanol Blending Programme and facilitate the government's endeavour for energy transition. The Budget also exempts customs duty on acid grade fluorspar, and crude glycerine that will boost overall production capacity of Indian chemical companies. 

ICN presents the industry perspective on the Union Budget 2023 -24 

Anand Desai, Managing Director, Anupam Rasayan India  

“The Indian chemical industry contributed 7% of the country's GDP in 2022. Keeping the same into consideration, we are happy with the government's initiative to exempt basic custom duty on certain raw materials - Denatured ethyl alcohol, acid grade fluorspar, and crude glycerine that will boost overall production capacity of Indian chemical companies. This exemption in raw materials will enhance the manufacturing and encourage exports of specialty chemicals in the global market. 

For agriculture and its allied sectors, the Finance Minister stated the PM Pranam Scheme, which will promote balanced use of fertilizers reducing fertilizer subsidy bills. Furthermore, the increasing importance of the Europe and China +1 strategy adopted by multiple nations is expected to drive the demand for the Indian chemical industry. These initiatives are aimed at fostering a sustainable development of the chemical industry in India, and to help the industry become a leading sector in the global market."  

Ravi Annavarapu, President, FMC India 

"It's largely a positive budget for agriculture. We welcome the government’s effort to modernize Indian agriculture with the introduction of digital public infrastructure for agriculture, Agri Accelerator Fund, Value chain linked PPP initiative on cotton, promotion of healthy planting material and enhanced agriculture credit target apart from farmers-led decentralized storage capacity build up through cooperatives. This budget will promote R&D, innovation, and digitization of agriculture apart from promoting disruption through the startup ecosystem. We see this supportive of precision agriculture and make farming more sustainable. What would further help will be providing tax incentives for R&D and extension services to corporations. 

 The government's focus on natural farming will be served better if it can lay out clear guidelines for introducing global biological or microbial technologies for the farmers to manage the potential crop loss due to pests and promoting Integrated Pest Management. Agriculture loses more than Rs. 2 lakh crores worth of crops to biotic pressures. Government will do well to align the regulatory system to expedite introduction of newer technologies in agriculture.

 Sanjiv Kanwar, Country Manager, Yara India 

“The development of digital infrastructure for agriculture as an open source will enable inclusive farmer-centric solutions through improved access to farm inputs. Yara has already been working with farmers to provide a one-stop digital platform for knowledge sharing and promoting sustainable agricultural practices in India. The government’s focus on regenerative farming will help India move towards reduction in Carbon emissions from agriculture. We strongly believe the focus on integrated nutrient management aligns well with the overall vision of sustainability that has been outlined by the government.” 

Pankaj Poddar, Group CEO, Cosmo First 

“The budget is in line with the vision of the government where the main focus is on infrastructure development and making India Atma Nirbhar by strengthening our MSME sector and boosting the startups in India not only in fintech side but now also on agritech as well. The decision of introducing ‘Vivad se Vishwas’ to return 95% of bid to the MSMEs in case of failures to execute contracts during the Covid period and bring another dispute resolution scheme under Vivad Se Vishwas-2 to settle commercial disputes is indeed a great relief for businesses. The infusion of Rs. 9,000 crore through the revamped credit guarantee scheme and additional collateral-free credit of Rs 2 lakh crore to MSMEs and reducing cost of the credit by about 1%. Through these initiatives, India will emerge to become a 5-trillion-dollar economy. 

The industry was expecting a major boost in the manufacturing sector by extending the last date for setting up a new manufacturing facility with lower tax rate benefit. However, the overall Union Budget 2023-24 is positive and will drive growth of the MSME as well as the start-up sector and give a boost to the infra sector.” 

Vikram Handa, Managing Director, Epsilon Carbon

“The Finance Minister made some massive announcements to help India make a successful transition to green energy, which is an encouraging move toward a more sustainable future. Making #EVs more cost-effective by cutting down on imports of Lithium-Ion batteries is a great step; however, domestic manufacturing companies had been anticipating Government aid and resources towards the ancillary industries of the energy sector. The Viability Gap Funding (VGF) backing for battery power storage plans and the reduction in the importation of batteries are required to make us Atma Nirbhar in our energy needs.”

Priyavrata Mafatlal, Director, Nocil Limited

“A well-balanced budget in a challenging environment, a good balance between a strong Capex push and maintaining macroeconomic stability. Increase in the import duty of compounded rubber augurs well for domestic sourcing of rubber and the domestic supplier eco-system for rubber compounding.” 

Sabyasachi Majumdar, Senior Vice President & Group Head - Corporate Ratings, ICRA 

Renewable energy

Limited said, "The budget’s focus on green growth reinforces the commitment towards achieving energy transition in the long run. The announcement of a Viability Gap Funding (VGF) scheme for battery energy storage projects and the stated intent of coming out with a framework for pumped hydro projects is a positive for the RE energy sector, given the importance of storage for RE sources, which are intermittent in nature. However, the fleshing out of the details is awaited; and timely implementation of these measures will remain crucial. The proposal for investment in transmission lines for large-scale evacuation of green power from Ladakh is likely to support RE capacity addition and grid integration. 

The already announced National Green Hydrogen Mission with a target to produce 5 MMT of Green Hydrogen is also a positive, although the cost competitiveness of the same remains a key monitorable. The increased budgetary allocation (Rs. 160 billion, 67% increase over FY 2023 RE) under reform lined result-oriented Capex scheme is likely to enable state discoms to augment their infrastructure & thus reduce their operational inefficiencies.” 

 Oil & Gas 

“The budgetary allocation towards capital support to Oil Marketing companies (OMCs) is Rs. 30,000 crore as against the industry’s ask of Rs. 50,000 crore to compensate for losses incurred on the sale of auto fuels and LPG. The Government of India in October 2022, approved a one-time grant of Rs. 22,000 crore to PSU OMCs for losses incurred on sale of LPG which only partially compensates for the losses incurred. The budgetary allocation for DBT on LPG (domestic) sales is low at Rs. 180 crore in ICRA’s opinion which would be a risk for PSU OMCs in case international crude oil or LPG prices rise. The allocation to Indian Strategic Petroleum Reserves Limited (ISPRL) is Rs. 5,000 crore for build-up of crude oil reserves. The increase in basic customs duty on Naphtha would be beneficial for the refiners as it would increase their sales realisations on domestic sales. Further, exemption of excise duty on blended Compressed Natural Gas equal to the GST paid on Biogas/Compressed Biogas component would promote increased usage of the latter." 

Fertilizers  

"The FY2024 Budget has a healthy focus on the farm sector, which is likely to benefit the fertilisers sector. The budget envisages launching of the PM PRANAM scheme to incentivize States and UTs to promote alternative fertilizers and balanced use of chemical fertilisers to achieve an optimal balance of NPK in the soil, which has been distorted because of excessive use of N ingredients. Further, it also focuses on creating a pan-India micro-fertiliser and pesticide manufacturing network. Moreover, the National Green Hydrogen Mission envisages a shift in usage to green hydrogen from natural gas which will reduce the dependence on fossil fuels over a longer term. The Government has budgeted Rs. 1.31 lakh crore for urea subsidy and Rs. 44,000 crore for nutrient based subsidy, taking the total budgetary allocation to Rs. 1.75 lakh crore. This allocation is lower than last fiscal’s revised estimates as well as ICRA’s estimates of around Rs. 2 lakh crore for FY2024 at current prices. ICRA however believes that there will be a calibrated subsidy allocation, depending on the evolving subsidy requirements during the course of the coming financial year.”  

Anil Tyagi, Founder, Chairman & Managing Director, Nuberg Engineering

“The Finance Minister has presented a visionary budget with a key priority on infrastructure & investment and green growth, and I will rate the budget as 9 on a scale of 10.

The vision for a technology-driven and knowledge-based economy, with strong public finances and a robust financial sector in ‘Amrit Kaal’ is well thought out. The focus on capital outlay including the states is especially exemplary. The FM’s emphasis on infrastructure development having a large multiplier impact on growth and employment is backed by an increase in capital investment by 33% to Rs. 10 lakh crore to 3.3% of GDP.

Reduction in customs duty on critical chemicals namely methanol, acetic acid, and heavy feedstocks for petroleum refining being reduced is double-edged. It will help the downstream industries while also showing the path forward for investment in these as the duties can be changed later as domestic capacity catches up as in the case of sodium cyanide for which adequate domestic capacity exists.

Implementation of programs for green fuel and energy will help in reducing the carbon intensity of the economy. The Rs. 19,700 crore outlay for the National Green Hydrogen Mission along with Rs. 35,000 crore for priority capital investments towards energy transition and net zero objectives, and energy security by the Ministry of Petroleum & Natural Gas will be transformational.”

Dr Kalyan Goswami, Director General, Agro Chem Federation of India

“It's a very much balanced budget. The proposed Agriculture Fund would encourage agri-startups by young people in the rural segment. 63,000 primary agricultural credit societies proposed would also boost in Rural Development. Few handholding support to micro and small industries which has suffered in epidemic time, could have also been a good step.”

Kishan Karunakaran, Founder and CEO, Buyofuel

“The Budget 2023-2024, just like the budgets of the past 5-6 years, has recognised the importance of renewable energy and biofuels and has some really big announcements for the biofuels sector and renewable energy at large. Specifically, for biofuels, the announcement of Rs. 35,000 crore outlay for Initiatives towards Net-zero, the announcement of a green credit programme to incentivise Capex investments towards climate action by companies and the announcement of support for ‘waste to wealth’ plants under the GOBARdhan scheme will give a significant boost to the biofuels and waste to Fuels sector in India. With policies like these, it's only a matter of time before India will be a global leader in biofuels and climate action. We at Buyofuel will ensure that we continue to put all our energy and time into ensuring that India achieves its net-zero goal much earlier than 2070.”