Govt. Schemes for India’s Chemical Industry

India ranks fourth in the world when it comes to the largest consumers of crude oil and petroleum products. It is home to one of the biggest refineries in Asia, which is in Jamnagar, Gujarat and owned by Reliance Industries.

From the current value of approximately USD 220 billion, India’s chemical industry is projected to achieve a USD 300 billion evaluation by 2025 and the USD 1 trillion mark by 2040. Covering more than 80,000 commercial products, the industry is expected to grow at 9.3% to reach USD 304 billion by 2025 Covering more than 80,000 commercial products, the industry is expected to grow at 9.3% to reach USD 304 billion by 2025.
 
Indian economy accounts for the major chemical producer ranking at 6th in the world and 14th in export of chemicals. Chemical industry provides the building blocks for several other industries such as agrochemicals, pharmaceuticals, textile, paper, petrochemicals, paints, soaps etc.

Increase in Demand for Chemicals

As per a McKinsey (2023) report, India is projected to be responsible for over 20% of the incremental consumption for chemicals around the globe over the next 20 years. The domestic consumption and demand are projected to grow from USD 170-180 billion in 2021 to USD 850 billion-1 trillion by 2040.

Government Incentives & Policy Supports

Production-Linked Incentives (PLI)

(PLI Scheme for Investments in the Chemicals and Petrochemicals Sectors)

Under the PLI scheme, the Government of India offers companies incentives on incremental sales from products manufactured in domestic units. This aims to boost the country’s manufacturing potential as well its reliance on imports.

In the Union Budget for 2023-24, the Department of Chemicals and Petrochemicals was granted USD 20.93 million by the Government of India.

The Petroleum, Chemicals and Petrochemicals Investment Regions (PCPIR) Policy’s integrated manufacturing hubs shall receive an investment of approximately USD 276.46 billion by 2035.

The Government of India aims to create an Atmanirbhar Bharat (Self-Reliant India) in Urea and Di-ammonium Phosphate (DAP) production by using ‘Green Hydrogen under the National Hydrogen Mission.’

Petroleum, Chemicals & Petrochemicals Investment Regions (PCPIRs)

In India, Petroleum, Chemicals and Petrochemicals Investment Regions (PCPIRs), originally referred to as ‘Mega-Chemical Industrial Estates’ (MCIES) or chemical hubs, are special economic zones intended to facilitate production of petroleum and petrochemicals.

The Government aims to bring more investments and industrial development in these sectors. The PCPIR is expected to help gain the perks of co-siting, networking and better efficiency via usage of common infrastructure and support services. All PCPIRs have been set to have a specific region of approximately 250 sq. kms., where about 40% of the area is reserved for processing activities.

Approved PCPIRs in India are as follows:

• Gujarat PCPIR (Dahej)
• Odisha PCPIR (Paradeep)
• Andhra Pradesh PCPIR (Vishakhapatnam - Kakinada)
• Tamil Nadu PCPIR (Cuddalore - Nagapattinam)

Chemical Promotion Development Scheme (CPDS)

The scheme was first implemented in 1997 in the Chemical Division under Plan Head of Account. The scheme aims to extend support in the form of grant aids, for conducting workshops and seminars to obtain necessary inputs for enabling the Department to firm its views on various policy matters related to the Chemical and Petrochemical sector.

• The support is extended by the Department of Chemicals and Petrochemicals or in collaboration with other organisations, government agencies, PSUs.
• There were certain web-based applications developed for CPDS and its integration with NGO-DARPAN Portal to issue grants-in-aid. Only the proposals received through the CPDS portal shall be processed. (http://cpds.chemicals.gov.in)

The scheme has three components:

i.    Creation of knowledge products

This component aims at conducting studies/surveys, issuance of survey report, creation of data bank, production of promotional materials such as displays, booklets, broachers, etc. to create awareness.

ii.    Knowledge dissemination

This component aims at conducting seminars, workshops, conventions, conferences, and investors meet to promote development of chemicals and petrochemicals sectors.

iii.    Excellence Awards

This component aims at giving recognition in the field of research and innovation in Chemicals and Petrochemicals Sector.

Plastic Park Scheme

Plastic Park refers to industrial zones developed in clusters to establish units for different plastic companies and their allied industries. Various entities shall combine and synergize capabilities of the domestic downstream plastic processing industry. Plastic Parks play a major role in the development of plastic processing community material and equipment suppliers, plastic processing companies, plastic recycling companies.

Chemicals are one of the most vital aspects of the plastic industry.

A scheme to assist in establishing Plastic Parks as per requirements has been implemented by Department of Chemicals & Petro-Chemicals. It aims to assist the establishment of such parks on a need-basis that have world-class infrastructure, enable common facilities by adopting a cluster development strategy, to combine the capabilities of the domestic downstream processing industry. This scheme shall help boost investments, production potential and exports in the plastic industry.

Key goals of the scheme:

• Adopt modern, research and development-oriented measures to boost the competitiveness, polymer absorption capability and value addition in the domestic downstream plastic processing industry.
• Boost exports and value addition in the sector by encouraging more investments in this market through additions in capacity and production.
• Leverage innovative ways for waste management, recycling, etc. to achieve sustainable growth.
• Adopt a cluster development approach to realize the above-mentioned goals owing to benefits that arise due to optimized resources and economies of scale.

Note: The Government of India grants funding for up to 50% of the cost of the project under this scheme. However, there is a cap of INR 40 crores per project. Till date, the Department has approved 10 Plastic Parks.

Plastic Parks Approved by Govt. of India

S. No.	Location of Plastic Park	Final Approval Date	Total Project Cost (in INR crores)	Total Govt. Support Approved for the Project (in INR crores)	Govt. Support released till Date (in INR crores)
1	Tamot, Madhya Pradesh	09.10.2013	108.00	40.00	35.90
2	Paradeep, Odisha	09.10.2013	106.78	40.00	36.00
3	Tinsukla, Assam	21.02.2014	93.65	40.00	29.00
4	Deoghar, Jharkhand	20.12.2018	67.33	33.67	30.30
5	Bilaua, Madhya Pradhesh	20.12.2018	68.72	34.36	18.89
6	Thiruvallur, Tamil Nadu	30.07.2019	216.92	40.00	22.00
7	Sitarganj, Uttarakhand	03.12.2020	67.73	33.93	18.64
8	Sarora, Raipur, Chhattisgarh	13.04.2021	42.09	21.045	4.21
9	Ganjimutt, Karnataka	21.01.2022	62.78	31.38	NIL
10	Gorakhpur, Uttar Pradesh	April, 2022	69.58	34.79	NIL

Centre of Excellence (CoE)

The Centre of Excellence’s goals is to deliver the latest research and development facilities, state-of-the-art technologies and equipment to the state, while also enabling interactions in the community by acting as a platform and enabling quicker pace of growth. The CoEs also play a role and are responsible to build a positive brand image for India in terms of exports. Various entities shall interact and share the results of their research with the industry for the advancement and growth of the petrochemical industry, both upstream and downstream.

The Department has approved 13 CoEs across the country till date.

S. No.	Centre of Excellence (CoE)	Location of CoE
1	Sustainable Polymer Industry to Research & Innovation	National Chemical Laboratory, Pune
2	Green Transport Network (GREET)	Central Institute of Plastic Engineering & Technology, Chennai
3	Sustainable Green Materials	Central Institute of Plastic Engineering & Technology, Bhubaneswar
4	Advanced Polymeric Materials	Indian Institute of Technology, Delhi
5	Sustainable Polymers (Sus- Pol)	Indian Institute of Technology, Guwahati
6	Process Development, Wastewater Management in Petrochemical Industries	Indian Institute of Technology, Roorkee
7	Bio-engineered Sustainable Polymeric Systems	Central Institute of Plastic Engineering & Technology, Bhubaneswar
8	Specialty Polymers for Customized Additive Manufacturing	National Chemical Laboratory, Pune
9	Polymers, their Composites & Polymeric Membranes for Sustainable Development of Petroleum Industries	CSIR - Northeast Institute of Science & Technology (CSIR- NEIST)
10	Polymer Coatings for Decorative, Protective and Strategic Applications	CSIR-IICT, Hyderabad
11	Manufacturing of Next Generation Bio-Medical Devices	Central Institute of Plastic Engineering & Technology, Bhubaneswar
12	Sustainable & innovative Design and manufacturing of polymer-TOYS (SUNDAR - TOYS)	IIT, Guwahati
13	Design and Development for Value Added Toys of Rubber & Allied Finished Products	IRMRA, Thane

Goals of the CoEs:

• Facilitate world class testing facility.
• Facilitate world class R&D centre.
• Facilitate access to world class technology.
• Facilitate support for better productivity.
• Help with the development of new products.
• Establish recycling process technology, innovative collection, segregation, cleaning and development of recycled products.
• Provide required training to the technical staff of Member Industries.

Petrochemicals Research & Innovation Commendation

(Earlier referred to as National Petrochemicals Awards)

The Department of Chemicals & Petrochemicals of the Government of India plans to establish a Petrochemicals Research & Innovation Commendation Scheme to award exemplary innovations and inventions in the field of petrochemicals, products, processes, and other areas that have a national and social importance.

Following are some benefits of this scheme:

• Encourages inventors to conduct innovative R&D in petrochemicals and allied industry, which shall, in turn, enhance the performance/quality of the products.
• Boost innovative capabilities to reach the international level and gain global recognition.
• Assist the petrochemical industry in becoming a global competitor through eco-friendly processes and technologies.
• Enhance the performance of the existing products and their quality, which shall result in increased acceptance and rise in the demand for the products in the highly competitive market of petrochemicals.

The 11th edition of this award was held in September 2022. The winners were awarded INR 3 lakhs, while runners up received INR 1 lakh. This award event is conducted annually.

How to apply

• Applicants must file an application online for the commendation under any category or subcategory as per the predefined formats for individuals/teams/industry/academic institution/R&D institution/MSME.
• This scheme is available for all Indian citizens, institutions, industries, organisations, and startups that are registered in India or have been created by the Central or State Government or a Union Territory.
• The innovation must either be an original product, procedure or the enhancement of any existing product or procedure that shall improve the product-utility or the quality or efficiency of the procedure by boosting consumer benefits, accuracy, dependability, safety, product life, versatility, etc. Just theoretical hypothesis, innovation that is still an idea and the perpetual motion of machines shall not qualify for an award under this scheme. Further, the innovation must not be more than three years old when filing the application.

Note: Awardees of the National Petrochemical Awards are not qualified to participate in the Commendation Scheme for the next subsequent three years or editions.

FDI allowance in Chemicals in India

Apart from hazardous chemicals, 100% FDI in chemicals is permitted via the automatic route.

Growth Drivers

• Rising disposable income, median age of population, urbanization and growing penetration and demand from rural markets.
• Asian and Southeast Asian countries are responsible for the increase in demand for chemicals & petrochemicals.
• Change in the consumers preferences, which leans towards a healthier lifestyle and ecofriendly products.
• PLI scheme for manufacturing Advance Cell Chemistry Battery under the ‘Atmanirbhar Bharat Abhiyaan’.
• Emerging manufacturing centres.
• Rise in disinfectant demand post covid.
• Foreign investments.
• Skilled and inexpensive manpower.
• Growing end-use industries.

Global Chemical Investors

Some of the global chemical players in Indian market are:

• BASF
• Adnoc
• Rosneft
• Aramco
• Mitsubishi Chemical
• SABIC
• ExxonMobil

Conclusion

Some challenges faced by chemical industry in India are:

• Environmental Concerns: Increased air, water and soil pollution, and increased greenhouse gas emissions.
• Regulatory Compliance: The chemical industry is subject to a wide range of regulations and safety standards, which can be complex and costly. Ensuring compliance while maintaining profitability can be a significant challenge for companies.
• Operational Challenges: Volatility in raw material prices, cyber threats and complexity of supply chains.