Industry expects competitive tax structures and higher allocation for R&D from Budget 2024

Industry expects competitive tax structures and higher allocation for R&D from Budget 2024

Indian chemical industry has sought expects competitive tax structure, support for raw materials, strategic initiatives, expanded funding for R&D and technological support to maintain sustainable growth

  • By ICN Bureau | January 30, 2024

With Union Budget 2024 round the corner, Indian chemical industry has sought competitive tax structure, support for raw materials, strategic initiatives, expanded funding for R&D and technological support to maintain sustainable growth. ICN carries here industry’s expectation from Union Budget 2024-25.

S. Sunil Kumar, Country President - Henkel India

“In recent years, India's chemicals sector has surged, becoming the 6th largest producer globally and 3rd in Asia, contributing 7% to GDP. The industry reports indicate a compelling future, with a projected CAGR of 11–12%, by 2027. The sector is primed for rapid expansion, driven by heightened demand, a growing domestic base, and evolving consumer preferences. We anticipate the Interim Budget to introduce competitive tax structures, support for raw materials, and strategic initiatives, serving as a catalyst for the continued growth. With these, the Indian chemicals sector can become a global leader, boosting the economy, and paving the way for a sustainable future.”

Rajesh Aggarwal, Managing Director, Insecticides India

"As we approach the threshold of the 2024 budget, the agricultural sector needs higher allocation for indigenous Research and Development (R&D), with a focus on fostering innovation in sustainable farming practices to bring in the research based latest technology products for crop protection and nutrition within the reach of even small and marginal farmers.

The initiation of a Crop Diversification Programme is poised to enhance agriculture's resilience, impacting the market for agricultural inputs due to the diverse challenges posed by different crops. Finally, the successful implementation of the PM-AASHA initiative is considered pivotal in stabilizing farmers' income.

The indigenous industry had made a detailed proposal to Govt for including agrochemicals now a “Champion sector” under Production Linked Incentive (PLI)  scheme so that the manufacturers could be incentivised to enhance their production (capacity utilisation being 55% at present ).”

Raju Kapoor, Director, Industry & Public Affairs, FMC India

"As we enter the New Year, we welcome 2024 with cautious optimism about the industry outlook emerging out of the challenges encountered by the industry in the year 2023 for the agrochemical industry. The agriculture sector during 2023 saw GVA of the sector falling to 1.8%. While the underlying key drivers for the agrochemical industry remained intact. Hence, there is a need for the sector to reboot itself.

The second half of the year 2023 witnessed significant adverse impact of destocking on the crop protection industry, globally. During 2024, weather permitting, one anticipates an upturn in the Indian crop protection industry only towards the third/fourth quarter of the year, signaling a return to normalcy in the overall market dynamics. While the area under sowing for the Rabi 2023 is largely intact for field crops, the reduction in the pulses and oil seeds area in the sowing is negative for the industry.

One should expect moderation in the ‘dumping’ of agrochemicals from China. A significant advancement on the technology front is the much expected ramp-up of use of ‘drones as a service’ for applying fertilizers and agrochemicals. It is likely to get a major boost with the introduction of the government-backed ‘Drone Didi’ scheme. Better coordination between fertilizer and agrochemical industry would help stabilize drones as a service concept, improving the efficiency and efficacy of crop protection and nutritional use efficiency.

We should also expect launches of newer molecules to combat stubborn weeds such as Phalaris in wheat crops and insecticides segment, such as pink bollworms. This is expected to get a push by the declared intent of the regulatory body, the central insecticide board, to rationalize the time taken for regulatory approvals of new molecules.

The continuing growth of horticulture output would be positive for sustained demand for fungicides. While generic products may face pressure, the industry's forward-looking approach, coupled with supportive government schemes may ensure the industry returns to a growth path.

In essence, the agriculture industry's prospects in 2024 are characterized by its resilience, innovation, and strategic actions. As we manage inventory adjustments and adopt new technologies, the sector is positioned for a year of expansion, bolstered by strong food demand and a commitment to sustainable farming practices.”

Sanjiv Kanwar, MD, Yara South Asia

“We welcome the direction and scaling up of support for the schemes for the farmers, especially across credit and insurance, as well as for the agriculture accelerator fund. This will be positive for the agriculture and farm sector and will spur growth. Overall, the sustained focus of the government on ease of doing business for the industry is welcome. While we understand this is an interim budget, there is an opportunity to enhance sustainability of agriculture sector in India through policies that encourage greater use of solutions such as bio-stimulants, as well as enhancing nutritional sufficiency in soil health. We plan to work with stakeholders in the government and industry to build consensus on these areas, enhance choice for farmers, and simplify regulations.”

Dilip Sawhney, Managing Director, Rockwell Automation India

“Indian manufacturing is poised to witness historic growth numbers over the next 3-5 years. This will be driven by proactive government policies such as sectoral PLI schemes, VGF schemes, export promotion initiatives, and various other reforms. There is optimism in air as we hope that the budget strengthens policies, sustaining the current momentum. While global macroeconomic factors are providing a strong impetus for India to emerge as a manufacturing powerhouse, the budget should effectively leverage public investments towards Industrial R&D, Clean Tech and Workforce Skilling Programs in futuristic technologies such as AI. A renewed focus on the SAMARTH Udyog Bharat 4.0 initiative is necessary. The budget should actively encourage the adoption of smart, digital, and connected manufacturing technologies across the industry value chain, enhancing the competitiveness of the Indian manufacturing and capital goods sector. Furthermore, we recommend the introduction of more PLI schemes, specifically tailored for sub-sectoral areas within the manufacturing domain. This targeted approach will boost smaller or less-focused segments of the supply chain, fostering a well-rounded and resilient manufacturing ecosystem for India's sustainable growth, and making India integral to global value chains.”

Jillian Evanko, President and CEO, Chart Industries and Founding Member, IH2A

“We are very pleased to see the Government of India taking the first step towards demand aggregation and offtake incentives in fertilizer and refinery sectors, with the Mode 2A and 2B Guidelines under the NGHM SIGHT Scheme. The time is right to raise public funding to match the needs of a large economy that has high ambitions for accelerating the hydrogen transition. A US$ 5 bn India Hydrogen Transition Fund would put India at par with the EU, from public funding perspective, which is still short of India’s real requirement as the entire value chain needs to be developed in the country. India needs more hydrogen hubs, accelerated sectoral decarbonization in steel and chemicals, hydrogen infrastructure and domestic equipment manufacturing and specialized skill development. These should be five key priorities for developing the hydrogen economy in India in 2024. We look forward to working with all stakeholders to making this a reality.”

Rahul Walawalkar, Founder & President, India Energy Storage Alliance

“We expect the upcoming Union Budget 2024 to consider a special incentive program for Battery raw materials and chemical processing and Tax incentives which will bring more investments to India’s fast-growing energy storage industry. Also, the rationalization and reduction of GST rates to 5% for batteries for different applications across emobility and stationary storage would result in a reduction of overall system cost immediately. The Tax incentives will support the industry by generating immediate demand by providing reduced costs which will enable in the long run domestic manufacturing picking up.”

Saunak Saha, Partner, Climate Change and Sustainability Services, EY India

“In charting the course for a fiscally responsible and sustainable future, India must strategically allocate budget towards the transformative forces of green hydrogen, fortified carbon markets, and resolute climate action. Green hydrogen, far more than a mere fuel, represents an investment in the very fabric of our society—clean air, job creation, and enduring energy security. In the upcoming budget, India must earmark resources to propel the production and infrastructure of green hydrogen. These investments are not mere expenses but strategic commitments to competitiveness against fossil fuels, fostering acceleration across pivotal sectors like transportation, industry, and infrastructure. This also plays a strategic role in achieving India Inc’s ambitions for a net zero economy by 2070.

Carbon markets, integral to our emissions reduction strategy, beckon for reinforcement. Strengthening existing frameworks and exploring inventive market mechanisms are imperative to ensure a fair and efficacious carbon pricing. Budgetary allocations to support developing nations in establishing their carbon pricing infrastructure will cultivate a levelled playing field, hastening global decarbonization efforts. Considerable budget resources must be directed towards renewable energy, energy efficiency, climate adaptation, and the prudent conservation of natural resources.”

Girishkumar Kadam, Senior Vice President & Group Head - Corporate Ratings, ICRA

"During FY2024, the GoI has cut LPG prices and the industry’s expectation is for an adequate budgetary provision owing to volatility in crude oil prices. The Government had imposed special additional excise duty (SAED) on crude oil and certain refinery products w.e.f. July 1, 2022. Although it has revised SAED multiple times, these taxes have pared the profitability of upstream companies and refiners. With the softening of crude prices and reduction in GRMs, the industry has been demanding that the SAED be discontinued. Also, liquified natural gas (LNG) imports attract customs duty of 2.5%. Exempting LNG imports from customs duty like crude, which attracts nil duty, would promote the use of natural gas as a fuel."

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