· Sixth largest producer of chemicals worldwide and third-largest producer in Asia. (by output) .
· The size of the Indian chemicals sector for the year 2015-16 was USD 142 billion.
· For the first two quarters of FY 2017-18, production of total major chemicals and basic petrochemicals stood at 12816 thousand MT, while that of major chemicals was 5307 thousand MT.
· Total export of Chemicals and Chemical Products (excluding Pharmaceutical products and fertilizers) for the period April-Sep’2017 stood at USD 15 billion.
· Chemicals sector also acts as a key enabling industry and provides support for a variety of other sectors like agriculture, construction, leather, etc.
REASONS TO INVEST
· The Indian Chemical Industry is the 6th largest in the world and 3rd largest in Asia.
· The Chemical Industry in India is expected to reach USD 200 billion by 2020.
· India is also the sixth-largest consumer of chemicals in the world.
· Growth Drivers: Innovation, raw material availability, demand growth, and low-cost production.
· India has one of the lowest rates of per hour labor cost among major chemical producers.
· India’s proximity to the Middle East, the world’s source of petrochemicals feedstock, enables India to gain an advantage from economies of scale.
· Strong government support for R&D.
· Polymers and agro-chemicals industries in India present immense growth opportunities.
· 100% FDI is permitted through the automatic route. Additionally, the chemicals sector is delicensed except for few hazardous chemicals.
· 100% Foreign Direct Investment (FDI) is allowed under the automatic route in the chemicals sector, subject to all the applicable regulations and laws.
Fast-tracking of PCPIRS (Petroleum, Chemical, and Petrochemical Investment Regions):
· Under the PCPIR Policy, the Government of India conceptualized PCPIRs in a cluster approach for the promotion of Petroleum, Chemical and Petrochemical sectors in an integrated and environmentally friendly manner on a large scale.
· Each PCPIR is a specifically delineated investment region having an area of about 250 sq. km with around 40% of the area earmarked for processing activities.
· The Ministry of Chemicals & Petrochemicals has set up four PCPIRs in the states of Andhra Pradesh (Vishakhapatnam), Gujarat (Dahej), Odisha (Paradeep) and Tamil Nadu (Cuddalore and Nagapattinam).
· These four PCPIRs are expected to attract investment of around USD 117 billion, generating employment for 34 lakh persons. To date, investments worth USD 28 billion have been made employing around 2.93 lakh persons.
Setting up of Plastic Parks:
· The scheme aims to set up need-based plastic parks and the development of a strong ecosystem along with the provision of common facilities through a cluster development approach. The government of India provides grant funding up to 50% of the project cost, subject to a ceiling of USD 6 million per project. And, the remaining project cost is to be funded by the State Government or State Industrial Development Corporation.
· Plastic Parks in the States of Madhya Pradesh, Odisha, Assam & Tamil Nadu are being set up under the scheme of Plastic Parks.
Setting up of Centres of Excellence (COE) In Polymer Technology:
· The Department of Chemicals and Petrochemicals has set up five Centres of Excellence (CoE):
o CoE for Sustainable Polymer Industry through Research, Innovation, and Training (CoE-SPIRIT) at National Chemicals Laboratory, Pune
o CoE for Green Transportation Network (GREET) at Central Institute of Plastics Engineering & Technology (CIPET), Chennai
o CoE for Advanced Polymeric Materials at IIT, Delhi
o CoE on Sustainable Green Materials at CIPET, Bhubaneswar
o CoE for Sustainable Polymers at IIT, Guwahati.
· A financial support of 50% of the total project cost is being provided subject to an upper limit of USD 0.9 million over a period of three years.
· Provision of Grant-in-aid to educational/research institutes for setting up Centre of Excellence (CoE) with a view to improve existing petrochemicals technology and promote the development of new applications of polymers and plastics.
· Under the Chemicals Promotion Development Scheme (CPDS), the government provides Grant-in-aid for the creation of knowledge products through studies, surveys, data banks, promotion materials, etc. to facilitate the development of the sector.
· To strengthen civil and technical infrastructure, research and development capacities and academic and training initiatives, budgetary allocations are made towards CIPET (Central Institute of Plastic Engineering and Technology)
R&D Incentives for Industry and Private Sponsored Research:
· A weighted tax deduction is given under section 35 (2AA) of the Income Tax Act.
· Weighted deduction of 200% is granted to assess for any sums paid to a national laboratory, university, or institute of technology, or specified people with a specific direction and that the said sum is used for scientific research within a program approved by the prescribed authority.
Manufacturers with an IN-HOUSE R&D Centre:
· Section 35 (2AB) of the Income Tax Act, 1961 provides a weighted tax deduction of 150% of the expenditure incurred by a specified company, on scientific research in the in-house R&D centers as approved by the prescribed authority. This does not include expenditure on the cost of any land or building.
· The weighted tax deductions of 150% are effective till 31st March’2020. Consequent upon that, the weighted tax deductions will be 100%.
· Apart from the above, each state in India offers additional incentives for industrial projects.
· Incentives are in areas like subsidized land cost and relaxation in stamp duty exemption on sale/lease of land, power tariff incentives, concessional rate of interest on loans, investment subsidies/tax incentives, backward areas subsidies, special incentive packages for mega projects, etc.
· Export promotion capital goods scheme.
· Duty drawback scheme.
· Merchandise Export from India Scheme.
· Incentives for units in Special Economic Zones (SEZ)/National Investment and Manufacturing Zones (NIMZ) as specified in respective Acts or setting up projects in special areas like the North-east, Jammu & Kashmir, Himachal Pradesh & Uttarakhand.
Key Points in the Union Budget 2018-19:
· Total budget allocation made towards the Department of Chemicals & Petrochemicals during the year 2018-19 is USD 30 million.
· Under the Union Budget 2018-19, allocation made towards certain Central Government Schemes/ Projects are Assam Gas Cracker Project (USD 1,538), Chemical Promotion and Development Scheme (USD 0.46 million ) and for promotion of Petrochemicals ( USD 8.53 million ).
· In the Union Budget 2018-19, CIPET (Central Institute of Plastic Engineering and Technology) has been allocated USD 12.86 million.
· The Indian agrochemical industry is worth USD 4.9 billion, and around 50% of it is export-oriented.
· India is the fourth-largest producer of agrochemicals after the US, Japan, and China.
· The Indian Specialty Chemicals industry is worth USD 28 billion and accounts for nearly 20% of the total chemical industry.
· Indian specialty chemicals grew at a CAGR of 14% over FY10-FY15 and slated to grow 13% over FY15-FY20.
· Indian specialty chemicals are expected to account for 5% of Global Specialty Chemicals by 2020.
· The Indian colorant industry registered a growth rate of 10% over the period FY 2010-15 and is expected to grow at a rate of 11% over the period FY 2015-20.
· For FY 15, the size of the Indian colorant industry stood at USD 5400 million. This is poised to increase to USD 9100 million by FY 20.
Prominent Industrial Clusters / SEZs and Major upcoming Projects in PCPIRS:
· Total area- 453 sq. km.
· Processing area- 248 sq. km.
· Investments made- USD 13 billion
· Projected Employment- 8,00,000
Andhra Pradesh PCPIR:
· Total area- 640 sq. km.
· Processing area- 270 sq. km.
· Investments made- USD 6.7 billion
· Projected Employment- 8,00,000
· Total area- 284.15 sq. km.
· Processing area- 123 sq. km.
· Investments made- USD 6.9 billion
· Projected Employment- 6,61,354
· Total area- 256.83 sq. km.
· Processing area- 104 sq. km.
· Investments made- USD 1.24 billion
· Projected Employment- 7,37,200
· Assam Gas Cracker Project commissioned, expected to produce about 2.8 Lakh MT (Metric Tonne) polymers per annum and generate 1 lakh jobs
· 0.44 Million MT Per Annum Polypropylene Plant commissioned at Mangalore
· Polypropylene Unit of Dahej project commissioned - capacity of 1.1 Million MT per annum of ethylene and 0.4 Million MT per annum of Propylene
· ONGC Mangalore Petrochemicals Ltd.’s aromatics complex commissioned – capacity of 914 Kilo Tonne Per Annum (KTPA) of Paraxylene and 283 KTPA of Benzene
· Four plastic parks approved in Madhya Pradesh, Orissa, Assam, and Tamil Nadu.