India to consider PLI scheme for chemicals and petrochemicals sector: FM Nirmala Sitharaman

India to consider PLI scheme for chemicals and petrochemicals sector: FM Nirmala Sitharaman

Govt encouraging indigenous chemical manufacturing to reduce the import bill

  • By ICN Bureau | July 28, 2023

Union Minister of Finance and Corporate Affairs, Nirmala Sitharaman said that the Indian chemical and petrochemicals sector has huge potential, and it also impacts other sectors of the economy. The Finance Minister said that the importance of the sector can be gauged from the fact that it manufactures 80,000 products which includes sectors like agriculture, infrastructure, textiles and packaging. “We are in favor of India becoming a manufacturing hub and we will consider the PLI scheme also for the chemicals and petrochemicals sector,” she added.

Addressing the FICCI’s 3rd Global Chemicals & Petrochemicals Manufacturing Hubs in India Summit’, Sitharaman stated that India has set its sight on becoming energy independent by 2047 and achieving net zero by 2070. “India is all set to become energy independent by 2047 and achieve net zero by 2070. There is a need to focus on green growth and reduction in carbon intensity. The combined exports of major chemicals and petrochemicals in 2022-23 was US $9 billion but imports also increased to US$ 13.33 billion. Many of these imports included items which can be produced in India itself and the Government is putting all out efforts in this direction as well. The market of Specialty chemicals is growing exponentially at 12% CAGR and there is need for more robust support for specialized chemicals. The emergence of this market is driven by the country’s strong process engineering capabilities, low-cost manufacturing capabilities and abundant manpower,” Sitharamam added.

“The Production Linked Incentive scheme is a step in the right direction that will develop India as a global chemical manufacturing hub. The National Green Hydrogen Mission was announced with an outlay of Rs 19,744 crore for 2023-24. India is a global hub for production, export, usage of green hydrogen. Sustainability, and circularity are fast emerging as global benchmarks. There are investors that are looking for joint ventures in India, and therefore, the partners in India must be conscious of it and incorporate sustainability into their operations. We cannot reach global levels when our standards in sustainability are not up to the global mark. I would appeal to the chemical industry bodies to focus on the ways in which sustainability can be achieved and encourage rapid shifts towards sustainable technologies. It is not important only for India but globally. The challenges before the chemical industry are enormous including the efficient waste management as well as efficient waste generation. On the skill development front, not all the chemical engineers from top 25 institutions are able to find the relevant opportunities and they have to change their specialization. We need to look at the issue. As far as duty structure correction is concerned, it will be looked at again holistically,” Finance Minister added.

Bhagawanth Khuba, Union Minister of State for Chemicals and Fertilizers, New and Renewable Energy spoke about the enormous opportunities offered by the Indian chemical industry.

“The market size of the Chemical and Petrochemical sector is around $ 190 billion and is likely to reach $ 300 billion by 2025 and US $ 1 trillion by 2040 with huge opportunities for investments. The Production Linked Incentive (PLI) scheme has received praise across the world. Even after Covid pandemic, our GDP is close to 7.2 percent, inflation is below 4.25% and unemployment is below 5%. All the three statistics are one of the best among the world and the credit goes to the leadership of Prime Minister and Finance Minister. This increases the confidence of the global investors. The Department of Chemicals and Petrochemicals has been trying to develop the ecosystem. The government is working with state governments to set-up chemical parks in the country and the process of setting up plastic parks is already in place. Government is also creating a Center of Excellences to bring industry and academia together along with promoting skill development,” said Khuba.

Pratap Keshari Deb, Minister of Industries, MSME & Energy, Govt of Odisha said, “We are growing domestically at 8 per cent in the chemicals sector and to sustain this growth over the next 10 years we would need 40 per cent growth in the capacity. The government of Odisha will handhold the industry who wants to set up industry in the state.”

Arun Baroka, Secretary, Department of Chemicals and Petrochemicals, Ministry of Chemicals and Fertilizers, Government of India highlighted the fact that whole world has recognized the Indian economic growth despite the global uncertainty.

“With the increasing demand, the outlook remains pretty strong and the government is continuously trying to create an enabling environment and is investing heavily into the infrastructure. India’s chemical and petrochemical industry plays a huge role in the overall GDP of the country. We are projected to grow up to US $1 trillion growth by 2040, and therefore, we have to ensure that there are much better facilities because chemical industry is at the fulcrum of many allied industries and is projected to have  an accelerated growth stabilized by various growth factors such as industry friendly government policies, availability of low cost skilled manpower, low per capita consumption and rising level of incomes,” said Baroka.

 “The industry landscape is driving the chemicals towards the next wave of growth and presenting better facilities. Location advantage is also helping the Indian chemical industry. The chemicals and pharma industries are interrelated. There are huge growth projections in sectors such as pharmaceuticals, construction, agrochemicals, automobiles etc. India is establishing itself as a global chemical manufacturing hub in terms of strategic locations such as PCPIR hubs. We have had good success in a few locations such as Dahej but in the eastern region, we have work in progress. Not all the locations have been able to do justice especially the southern states but there is a way out and we are working to improve the scenario. In terms of support by the government, it has provided a multitude of systems to encourage the adoption of a circular economy and sustainable growth. For India to emerge as a manufacturing hub, multi- multi-pronged approach has been adopted for recycling and reusing hazardous chemicals,” added Baroka.

Subhrakant Panda, President, FICCI said, “Indian chemicals sector is highly diversified with 80,000 products which have an interplay with multiple sectors being key building blocks and raw materials. It has grown at more than 1.2x of GDP, and holds immense potential for employment as well as exports, driven by domestic consumption and enabling policies of government. India is an attractive destination for the chemicals sector and is expected to be a $1 trillion business by 2040 having a key impact on the economy overall.”

Deepak C Mehta, Chairman, FICCI National Chemical Committee and CMD, Deepak Nitrite Ltd and Prabh Das, Chairman, FICCI Petrochemicals Committee and MD & CEO, HPCL- Mittal Energy Ltd also shared their perspective on the Indian chemicals and petrochemicals sector.

The two-day event is being jointly organized by the Department of Chemicals & Petrochemicals, Ministry of Chemicals & Fertilizers, Government of India with Federation of Indian Chambers of Commerce and Industry (FICCI).

The summit brought together global leaders, CEOs, government authorities, key industry players, state governments and subject matter experts from around the globe in an open dialogue to discuss the key developments, sectoral issues and the way forward with respect to Indian chemicals and petrochemicals industry.

Register Now to Attend Navigating the Path to Net-zero in the Chemicals Industry on Friday, 26 July 2024

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