Union Minister for Finance and Corporate Affairs, Nirmala Sitharaman, announced the Union Budget for 2022-23, which exemplifies India’s steps towards the ‘Make in India’ and ‘Atmanirbhar Bharat’ initiatives. It focuses on sustainable development in every sector, domestic and corporate, ensuring longevity and quality growth.
Contribution of the chemical sector:
During the budget, the Government of India mentioned that the GDP is projected to grow at 9.2% in the current fiscal year, an all-time high. (1) The Indian chemical sector has shown exponential growth and significantly contributes to India’s GDP. In 2019, the sector stood at $178 billion and expected to contribute over $300 billion by 2025. Out of the $178 billion estimations, the special chemical industry is estimated to grow to approximately $32 billion. (2) An increase in investment of Rs. 8 lakh crore ($ 107.38 billion) is also expected by 2025. (3)
The market size of special chemicals in the entire chemical and petrochemical industry is around 22% (2). With increasing demand, the industry is on the path to colossal growth.
The jump will result from increased demand, and the budget is to fuel the same.
Initiatives to develop the chemical industry:
For a long time, the Government of India has considered focusing on the development and production of chemicals in India. (3) The FY2022 Budget gives a comprehensive structure to achieve higher internal demands, increase export, and simplify import and export taxes.
The government has removed more than 350 exempted entries (4) and has encouraged the production of many chemicals in India. Tariff reduction will increase exports in the long term, thereby facilitating investments.
Finance Minister Nirmala Sitharaman mentioned that excluding these entries, especially on chemicals manufactured in India, will help move ahead with an independent India in production. For the same reason, concessional duties on certain chemicals will be applied.
An instant effect of the Union Budget was seen in the share market. The reduction in tariff of specific chemicals methanol, acetic acid and heavy feedstocks for petroleum refining has affected the stocks of many companies. The companies that produce the chemicals have seen a decline in their stocks, whereas the opposite is true for B2B companies, that is, the ones that provide the raw materials. (5)
Focus on sustainable growth:
The budget has also focused on energy consumption via Production Linked Incentive (PLI) and applying the Energy Service Company (ESCO) business module.
These initiatives focus on installing solar panels building infrastructure to manufacture the same, and ensuring the implementation of energy-saving modules.
Rs. 19,500 crores have been allocated towards the successful implementation of PLI schemes. (6) This will herald India’s production and generate employment of around 60 lakh in the next five years. (1)
The aim is to make India a more carbon-neutral, energy-efficient and self-dependent economy, both production and employment wise in the long run.
Fineotex Chemical Limited (FCL) has always adapted techniques for zero waste and a non-toxic environment. Our steps towards sustainable development and cleaner production are aligned with the vision of the budget.
The set of laws and ideas proposed is an inclusive approach to the nation’s overall growth. If implemented as planned, a cycle of development will be initiated.
High production of speciality chemicals will lead to employment, a higher export rate, and reduced dependency on raw materials and finished products imports. It will bring in more foreign investments in the sector. This will recognize Fineotex Chemical Limited’s contribution towards ‘Atmanirbhar Bharat’as envisioned by the current budget.