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The Centre is working on a Production Linked Incentive (PLI) scheme for the chemical sector, with a likely focus on agrochemical intermediates, pharmaceutical intermediates, dyes, and multiple-use chemicals, to increase the cost competitiveness of manufacturers, sources have said.
“The discussions for a PLI scheme for the chemical sector are progressing fast and four sectors, covering about 26 basic chemicals, have been tentatively identified. These will help prop up the entire chemicals sector as input costs would come down,” a source tracking the matter told businessline.
Key parameters
The government is now seeking inputs from the industry in areas such as the proposed minimum capacity of each chemical for PLI, the minimum production in initial year for being eligible to claim incentive, the raw material and technology availability for production of identified chemicals and R&D investment calculation.
“The idea is to ensure that the parameters of the PLI scheme for the chemicals sector are such that it is feasible for the industry to meet it. That is how adequate investments can be attracted,” the source said.
In July, Finance Minister Nirmala Sitharaman had said the government was open to introducing a production-linked incentive (PLI) scheme for investments in the chemicals and petrochemicals sectors to reduce the industry’s reliance on imports.
In line with the policy of ‘Atmanirbhar Bharat’, the Centre formulated the PLI Schemes for 14 key sectors,with an outlay of ₹1.97-lakh crore. The sectors included mobile manufacturing, drug intermediaries and API, medical devices, automobiles and auto parts and pharmaceuticals, among others. However, with a substantial part of the ₹1.97-lakh crore still unutilised, the government is mulling extending the benefits to other sectors as well.
“Providing PLI benefit to the identified groups of chemicals will help several sectors as these are used in production of numerous items,” the official said. For example, agrochemical intermediates are extensively used to produce pesticides such as fungicides, herbicides, and insecticides.
Pharmaceutical intermediates, proposed to be covered under the PLI, are chemicals widely used in manufacturing various types of drug in bulk quantity. Dyes and multiple use chemicals, too, are used in a variety of products, the source said.
“The government is hopeful that it will be able to give a final shape to the scheme soon,” the source added.
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