Inputs requested by PMO on Chemicals Sector
Posted On : 31st July 2009

ICC's views are as follows :

  1. The present status of the chemical industry :

    Indian chemical industry consists of various sectors such as Organic & Inorganic Chemicals, Plastics & Petrochemicals, Petroleum Refining, Heavy Chemicals, Fine & Speciality Chemicals, Paints, Dyestuffs, Pesticides, Fertilizers etc. Some of the sectors like Speciality chemicals etc. are not affected much comparative to other sectors in the chemical industry due to downturn in economy. After the stimulous packages given by Government, slight revival of demand took place. However, it is not picked up to the expected level and these sectors in chemical industry are still suffering from capacity under utilization.

  2. Projection - where the chemical industry will be after 6 months from now :

    Revival of domestic demand in coming six months will help in improving capacity utilization. Simultaneously, improvement in world economy also may help in revival of chemical industry to certain extent.

  3. Immediate areas of concern :

    • Because of global downturn many countries are having demand contraction. This is resulting in their exports to India. Thus India is experiencing cheap imports making our own products non-competitive.
    • Global downturn is also resulted in considerable reduction in exports
    • Credit availability to chemical industry
    • Free Trade Agreements signed so far has not resulted in any advantage to Indian chemical industry, while other countries who has signed FTAs with India are benefited much more

  4. Policy initiatives required :

    1. Protect Indian chemical industry by imposing safeguard duties wherever cheap imports are coming in Indian market
    2. Import duty on basic inputs may be brought down to 0%
    3. Provide sufficient export incentives to make Indian export competitive
    4. Encourage R&D by providing :
      • Soft loans at reduced interest rates with longer moratorium period and longer repayment period.
      • Zero Import Duty on capital goods imports for R&D activities
    5. Encourage investment in energy efficient & green technology and initiatives to address climate change
      • Carbon Emission Reduction Credit) may be exempted from income tax
    6. Improve credit availability and soft loans to chemical industry
    7. Government must resist some of the Non Tariff Barriers which other countries are exercising (like REACH) or alternatively provide monetary incentives for complying with them
    8. Improve infrastructure in the chemical industry clusters
    9. Chemical industry may be excluded from present and future FTAs

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