Financial Daily from THE HINDU group of publications
Sunday, Mar 24, 2002
Industry & Economy - Chemicals
Cess for chemical R&D proposed
MUMBAI, March 23
INTRODUCTION of a special cess of 0.5 per cent (of the sale price) on all chemical products sold in the country has been recommended by the Government-appointed task force on the chemical industry to create an R&D fund for the sector.
The report of the task force, which was submitted to the Union Minister of Chemicals and Fertilisers, Mr S.S. Dhindsa, here today, also suggested that contributions to the fund should be made tax-free.
Dr A.S. Ganguly, Chairman, ICI Ltd, headed the task force set up in July 2001. According to the report, the Indian chemical industry (excluding petrochemicals, pharmaceuticals and fertilisers) has seen its profitability decline to 0.8 per cent in 1998-99 against 6.3 per cent in 1994-95. Growth in creation of gross fixed assets has also fallen to 9.5 per cent (21.8 per cent) during the same period.
Talking to newspersons, Dr Ganguly reiterated the chemical industry's demand for and "industry park''. ``The cost of infrastructure to the industry in India is prohibitive. Problems such as unreliable and expensive power, high interest rates and inadequate infrastructure plague units, which are scattered across states, have contributed to the decline of this industry. Chemical parks will be one solution to these problems,'' Dr Ganguly said.
This, according to the report, can be an answer to Chinese imports, especially in the post-WTO regime.
Production costs in China are low because of formation of special economic zones, which provide infrastructure and tax benefits to industry.
Another reason for the decline, according to the task force, is low investments in R&D. It recommends creating ``knowledge equity'' to ensure better collaboration between R&D laboratories and industrial units.
The research output of the Government agencies and universities, can be exchanged for the equity of companies, which are willing to licence or buy their intellectual property rights and for joint R&D projects.
The report also underlines the need developing ports especially in Maharashtra and Gujarat for handling and storage of bulk cargo from super tankers.
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