Financial Daily from THE HINDU group of publications
Friday, Dec 20, 2002
Industry & Economy
Chemical cos seek easier funds, laws
Dr K. Anji Reddy, Chairman, Dr Reddy's group of companies, at the inaugural ceremony of Chemcon 2002 which began in Hyderabad on Thursday.
HYDERABAD, Dec. 19
THE chemical industry currently under threat by the onslaught of cheaper imports, wants the Government's support to overcome a number of bottlenecks in the post-WTO regime.
According to the President of Indian Institute of Chemical Engineers (IIChE), Prof S.K. Sharma, the industry, which is suffering from high cost of power and finance, needs low-cost finance, liberal laws and exit policy.
Addressing the Indian Chemical Engineering Congress (Chemcon)-2002 and the 55th annual session of IIChE here on Thursday, he said the industry was suffering from factors such as inefficient operations, outdated technology, lower capacity plants, high cost of power and finance, high energy and raw material intensity, limited research and development (R&D), reservation for small-scale sector, and limited concern for environment on the one hand and pressure of regulatory bodies on the other.
Coupled with the deregulation of domestic market by the Government, the competitiveness of the industry underwent a metamorphic change. The peak import duty rates for chemicals were reduced from 125 per cent in 1990-91 to 35 per cent in 1998-99 following the country's commitment to WTO. The peak import duty rate in chemicals currently was around 25 per cent to 35 per cent. This had resulted in the Indian chemical industry turning unviable and non-competitive, Prof Sharma said.
Apart from the development of strong and reliable infrastructure in the areas of power, water, transportation and communication, the industry also wants the Government to install common effluent treatment facilities in chemical zones and estates, especially for small-scale industry.
Urging the Government to initiate improvements in taxation policies towards arriving at uniform import duty structure, he said the Indian chemical industry was in need of tax reliefs for modernisation, especially for increasing efficiency, energy saving and safety.
Asking the Government to support the industries that produce surplus power efficiently through cogeneration, Prof Sharma asked the Government to rationalise subsidies and duty structure.
On the part of the industry, he said there was an urgent need to increase its competitiveness under the new WTO regime. The industry needs to take up technology upgradation for sustainable production and consumption, optimise scale of operation through mergers, forward and backward integrations, control costs through conservation of energy, and use indigenous renewable sources of raw material and energy.
According to Prof Sharma, IIChE initiated a number of measures to create greater synergy between the institute and professional bodies such as FICCI, ASSOCHAM and PHDCCI. This interaction was helpful in preparing a joint plan of action for solving some of the critical problems being faced by the chemical industry owing to the globalisation of economy, he said.
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