March 6, 2021
The PLI will look to increase self-sufficiency and enhance the export potential for the sector.
India’s development and transportation of the COVID-19 vaccine to 120 nations paints a positive picture of the sector’s capabilities.
Experts point out that a yearly investment of US$ 1bn for 10 years, and strengthening logistics and power will elevate the sector.
There has been a significant increase in the R&D spending of Indian chemical companies since 2014.
The chemicals and petrochemicals sector in India is to potentially receive Production Linked Incentives (PLIs), as per inputs given by Union Minister D V Sadananda Gowda during a webinar this week. A consultation-based format will be followed in order to formalise the PLIs for the sector. Once rolled out, the potential Initiatives will help enhance the self-sufficiency of the sector and make it more competitive in the global scenario. Sh Gowda remarked during the meeting “We should take our industry in confidence so that implementations can start from (the) first week of April. The challenge for the government is to now match the suggestions of the industry with the implementation part” Union Minister of State for Ports, Shipping and Waterways, Mansukh Mandaviya added that the development and shipping of India’s COVID-19 vaccine to 120 nations attest to the potential of the sector.
The Indian Chemical Council (ICC), an industry body in the chemicals and petrochemicals space has put forth a turnover-based goal of US$ 300bn by the year 2025. Experts opine that achieving the goal would require yearly investments of US$ 1bn so as to increase the scope of domestic manufacturing and intermediary functions in the B2B landscape. The complementary logistics and power mechanisms are also to be strengthened in order to elevate the export capabilities of the sector. It is imperative that India’s ability to manufacture base chemicals including propylene and ethylene be significantly enhanced. FICCI recommends a slew of measures to accelerate growth within the sector including the identification of an ideal product mix, taking on relevant mergers and acquisitions, and ensuring that ample feedstock is secured. Since the mid-2010s, there has been a gradual increase in R&D spending by companies in the space. HDFC reports that Aarti Industries tripled their R&D spending to US$ 8bn in FY2020 and included business divisions for contract research and manufacturing. The symbiosis of policy measures and robust innovation by leaders in the space can pave the wave for self-sufficiency and growth within the chemical industry.