Impact of Union Budget on Chemical Industry
Dr. Haritosh Mishra
General Manager(R & D)
Grauer & Weil (India) Ltd

The chemical industry is the backbone of industrial and agricultural development of any country and India is not different from others developed countries. Realizing the industry’s ambitious growth targets will always require a combination of policy intervention, company-level initiatives, meaningful industryacademic partnerships, wise and strategic investments, and larger international connection.

The role of chemical industry in the economic growth of a country is well established worldwide. From the ubiquitous cell phone, to solar panels producing carbon-free energy, to LED lights providing efficient lighting, from latest medical facility to modern aerospace industry — all are made possible by chemical industry products. In India, the chemical industry occupies a pivotal position in not only meeting basic needs but also in improving quality of life as well. Although India is relentlessly deficient in conventional petro-chemical hydrocarbons, the country has grown a well-developed refining industry that provides raw materials to numerous basic chemical industries.

The chemicals industry of India contributes 2.1% towards the nation’s GDP and accounts for almost 16% of India's manufacturing sector. It contributes 10.5% of our foreign trade. The Current market value of the chemical industry in India is 160+ billion US$ and is projected to reach 300+ billion US$ by 2025. The chemical industry affects almost all the sectors, directly or indirectly, such as agriculture, pharmaceutical, electroplating, automobile, coating, polymer additives, real state, power plant and many more. Without a smooth supply of chemicals, there will be hindrances to commercial activities and companies’ production, whoever is using them as ingredients. Unfortunately, the chemical Impact of Union Budget on Chemical Industry The chemical industry is the backbone of industrial and agricultural development of any country and India is not different from others developed countries. Realizing the industry’s ambitious growth targets will always require a combination of policy intervention, company-level initiatives, meaningful industryacademic partnerships, wise and strategic investments, and larger international connection. industry is facing a lot of problem, and many factors are responsible for this. The chemical industries have to ensure the both, the compliance with environmental laws, and sustained growth of the industry. This is the biggest challenge for chemical industries in the current scenario of changing technology and environmental regulations every day. However, the industry can mitigate the supplier chain risk by preparing for these challenges early with proper planning and adequate steps.

Advancement of Human Civilization
Chemical industries have contributed significantly to the advancement of human civilization by providing a growing understanding and ability to manipulate chemical molecules. It is the chemical industry which is responsible for converting raw materials like natural gas, oil, water, air, minerals and metals in to more valuable products. It is consistently searching and providing the solution to our day to day challenge in life. The union budget 2020 is dedicated providing "ease of Living" to all citizen in term of "Aspirational India, Economic Development and Caring India". The chemical industry has been instrumental in human development and products created by the chemicals industry. It has had an effect on all area of life, such as health, agriculture, hygiene, food, Coating & painting, aerospace, environmental and petrochemistry etc. Chemical Industry produces more than 80,000 different types of products and some new products are being added everyday by innovation and development. These products are used by individuals as well as other industries. Chemical sector is of strategic importance to the sustainable development of human being and plays a vital role in the economic development of any country. The new innovation in chemical industry can play very important role in the field of agriculture, hygiene & health, clean energy, food packaging, Painting & Coating etc. The chemical industries may provide the answer of many challenges of the 21st century including improving the health protection and care.

It can help us to understand the reasons of the various incurable diseases like cancer, corona virus, Lupus, Parkinson’s, AIDS, Alzheimer’s disease etc., which in turn will be helpful to improve care and protection by diagnostics and sensors for the prevention and detection of deadly diseases.

Food science is another branch of chemical application. The study of chemical processes and interactions of all biological and non-biological components of foods will help us to understand how the food products change under certain food processing techniques and ways either to enhance or to prevent them from happening that. For example, enhancing a process would be to encourage fermentation of dairy products with microorganisms that convert lactose to lactic acid; or preventing the process of browning on the surface of freshly cut Red Delicious apples using lemon juice or other acidulated water. For centuries, chemicals, such as salt, spices, and sulphides, have been added to food to improve taste and help with preservation. Processed food industry depends on identification of new additives, mostly chemicals, that can help preserve the foods.

Furthermore, the innovation of more efficient catalytic chamber for automotive engine may help us to cut the significant amount of green house and other poisonous gases. So chemical industry can really bring the changes to make the life easier and enjoyable which is what intended in 2020 union budget.

The Union Budget
Another focus of the 2020 union budget is innovation based new economy. The world has really shrunk due to globalization and communication revolution in recent past and so is our chemistry. Chemistry has gone down to nano and molecular level due recent development in nanotechnology and molecular -chemistry and -biology. The new trends of nanotechnology, thermos and photo switchable molecular magnet may realize the dream of molecular switch and data storage. The complex molecule like DNA and RNA in our biological system act as coded data and messenger for complex biological process like protein synthesis, DNA replication cell division etc. Drawing the inspiration from biological system, chemical industries can come up with material to rewrite the way of computing and data storage in the future. The government is determined to open up the quantum technology with wide application in the field of computing, communication and cyber security. We are so much dependent on digital technology for our day to day life that cyber security is the need of our time. Here also the chemical industry has to take the responsibility to develop the innovative materials to support the technological requirements. Government has budget 8000 crore for quantum technology in the 2020 union budget which will change the way of computing and digital technology.

Shedding the Tag of Polluting Industry
Government focussed on Swachh Bharat Mission and allocated 12,300 crore in 2020 union budget for solid waste collection, source segregation and processing. Pollution and environmental concern are one of the biggest challenges for chemical industries. Actually, the chemical industry is tagged as the most polluting and hazardous industry. The chemical industry must focus to shed the “tag” of being most “polluting industry”. The emerging global trends of chemical industry reveal that it is witnessing a gradual eastward shift – towards Asia. India, undoubtedly, will account for a substantial share of the new market. But at this point we have to look this trend with a different angle. Why the chemical industry is shifting towards eastward? Obviously, the simple answer is: The chemical industry is hazardous and polluting and that is why the developed country are shifting all the chemical processing industry from their lands to the developing or underdeveloped countries. For them the India is the best choice and that’s why India is getting huge chunk of business in chemical industry from western countries. In this upcoming scenario, a focus on sustainability would certainly be one of the many expectations from Indian chemical companies. The pollution level in many of Indian metros and industrial cities is above the alarming level and the impact of chemical industry on it will only deepen it in the coming years. The Bhopal gas leakage incident is still fresh in mind people. The main issues the chemical industry will have to address actively in the next 5 years are related to water, environmental concern, raw materials, and energy use and last but not the least, the hazardous management. Government intent is very clear with focus on clean India movement, focus on make in India to boost manufacturing sector, development of the new economic corridor and the encouraging to adopt the zero defect – zero effect manufacturing policy. But the sustainable growth in chemical industry in India is not possible unless the industry, government and technical and research institutes work together in coherent way to address these issues proactively and collaboratively. The saddest part is the lack of proactive collaboration between the Industries and Research institutions in India. Many of our research institution are doing great scientific work which could have huge industrial impact and value but due to lack of proper collaboration industry is unable to take advantage of it. In the similar way, many of the industries are also involve in research work and are doing great job. It is not that the initiative to bring them together was not taken. To bring them together to benefit each other “The Council of Scientific and Industrial Research” (CSIR) was set up even before independent in 1942 with the immediate goal to bring science and technology to the country and develop research capabilities which would support industry. Today, CSIR is known for its cutting-edge R&D knowledge base in diverse Science & Technology. But chemical industry has not garnered the fruits of institution’s knowledge base properly. Nevertheless, India have demonstrated a commitment to sustainability and initiated a range of sustainability programs, drawing on best practices adopted by global peers. However, unlike other industries such as pharma, cement, IT, software and still industry, where sustainability as an agenda has evolved in a broad-based manner among industry players, the chemical Industries (companies) in India have yet to take a collective corrective measure to maintain the sustainability of the sector. The actual strength of chemical industries in India is the main hurdle in for the proper organised structure of the sectors. 50% of Indian chemical industry are still unorganised, dominated by 80% MSMEs. The main challenges are to upgrade them to fulfil the requirement of new environmental compliances and make this sector a non-polluting sector. Even if majority of these small-scale industry shown commitment and initiated a range of sustainability programs, based on best practices adopted by global peers, but the lack of knowledge, infrastructures and requirement of additional capital investment are coming in their way.

Zero Defect – Zero Effect
2020 union Budget very much stressed on manufacturing sector, digitalization, environment, innovative technology, and “zero defect – zero effect manufacturing”. Chemical industry sector is the measure manufacturing sector of the modern economy of any developing nation. In India also Chemical industry contribute 16% to manufacturing unit and its affect all most all other sectors directly or indirectly. The goal of zero defect zero effect required the digitalization and automation of the chemical process in the industry. It is a vast task for the companies but not impossible. We have well developed indigenous digital and automation technology is available at hand and many companies are already in the process of fully automated chemical process. An organised structure or association supported with government body and institution can make a big difference. The MSMEs which constitute majority of chemical industries will not only face financial issue but they also lack the technological knowledge.

The Indian chemical industry needs to upgrade itself to meet international standards. That will also improve their performance in global trade. The MSMEs which constitute majority of chemical industries, are of smaller capacities and operating at uneconomic scales of production with obsolete technologies. The industry, especially the small and medium enterprises sector, does not have access to capital to upgrade technology on its own. They actually need to be supported by the system. Of course their initiation and commitment are must. If they will not change as per the demand of changing business environment, they won’t stand global competition especially with China and other developing nation. To remain globally competitive and comply with requirements like REACH (Registration, Evaluation, Authorisation and Restriction of Chemicals) & RoHS (The Restriction of Hazardous Substances) - European Union regulation which addresses the production and use of chemical substances, and their potential impacts on both human health and the environment. The level of pollution in groundwater and air pollution have reached at alarming level in most of the chemical industrial areas.

Many Indian chemical companies are in the forefront of environmental, water, health, hygiene, and safety performance, but the non-compliant attitude of many other companies and ineffective enforcement efforts in some industrial clusters are damaging the environment at very large scale. The provision in 2020 union budget is quite positive and encouraging for chemical industries, but needed to be done more. The government should come up with more incentives for ease of doing business, so that MSMEs are encouraged to adopt best policies and practices. The Central Pollution Control Board (CPCB), the State Pollution Control Board (SPCB), and chemical industry need to emplace the right incentives and determination to promote environmental protection in the chemical industrial area.

That will help them in achieving their long-term business goal. In succession, MSMEs can do value addition to their business by become policies compliant. Once they do so, it will help them to become more competitive to their global peers in the future.