New Delhi, July 19: Industry wants the government to create a Rs 25,000-crore modernisation fund for the chemical industry, along the lines of similar corpuses for steel and textile, which should be administered by designated all-India financial institutions.
India Inc feels that soft loans should be made available at the rate of Libor plus 2 per cent interest if the government is really serious about enabling the chemical industry to take on competition from China in the global markets.
The government has also been urged to permit conversion of excise dues into medium term loan which could be repaid after a moratorium of three years in five annual installments.
A series of suggestion incorporated in the report ‘The road map for the Indian chemical industry’ compiled by the Federation of Indian Chambers of Commerce and Industry (Ficci) will soon be given to the department of chemicals and petrochemicals.
According to the report, research and development funds similar to the one created for drugs and pharmaceuticals need to be created in order to upgrade, develop and commercialise technologies. The chemical industry says R&D expenditure should be tax deductible to the extent of 125 per cent.
A Ficci official said: “India’s total exports of chemicals are to the tune of $ 4.8 billion while its imports have burgeoned to $ 6 billion. We need to bridge this gap of $ 1.2 billion. We will approach the ministry of chemicals this week and discuss these issues.”
The $ 1.9-trillion chemical industry worldwide, largely dominated by India, China, US, Germany, Japan and France, manufactures some 4,000 different types of chemicals.
The official said, “India alone obviously does not manufacture such large varieties of chemicals. We need to import from other countries as well, but here lies the challenge.”
India imports a good amount of sophisticated or hi-technology chemicals to manufacture drugs, different catalysts, industrial solvents and host of different varieties of speciality chemicals.
The industry has unanimously requested the government to change labour regulations to improve investment climate in India. “Their should be freedom to engage and reduce labour (including contract labour) to increase productivity”, states the report.
S. . Singh, president of the Indian Chemicals Manufacturers Association (ICMA), said, “We may source raw material from the cheapest outlet, whether local or imported. But we should add value to it and then be able to export that value-added product. This is the way to reduce the gap between imports and exports. India has the intellectual capital to add value and we should utilise this capability.”