Page 167 - CW E-Magazine (1-10-2024)

Special Report Special Report

Union Budget 2024 and its impact on Indian chemical Bharat, has introduced a comprehen-
sive array of initiatives encompassing
CAGR 9.3%
sector nine pivotal areas, alongside fi nancial
304.0 provisions designed to empower far-
he Union Budget 2024 post the grew by 3.2% in 2023 and is forecasted AASHISH KASAD 278.1 mers, women, the underprivileged, and
Indian central elections, was to maintain this growth rate into 2024. Partner and National Leader 232.6 254.3 the youth. Many of these initiatives are
Tunveiled against a backdrop of a Chemicals & Agriculture, EY 212.8 centred on vital sectors such as agricul-
global economy that has demonstrated India, on the other hand, conti- 178.0 194.6 ture, manufacturing, Micro, Small and
resilience and steadiness despite several nues to remain a bright spot globally, by PARI SHAH Medium Enterprises (MSMEs), as well
unforeseen disruptions and geopolitical maintaining the momentum of economic Director, EY as on fostering job creation and enhanc-
tensions. According to the International growth and observing an increase in the economy has proven its robustness, ing skill development.
Monetary Fund, the worldwide GDP real GDP by 8.2% in FY24. The Indian navigating through a series of inter- Building on the favourable policy

Nominal GDP (₹ lakh crore) Real GDP Growth (per cent) (RHS) national adversities, including geopoliti- initiatives in the past few years and the
350 12 cal confl icts, the Red Sea crisis sparked
FY22
FY21
FY23
10 by political unrest in the Middle East FY19 FY20 Fig. 3: Chemical industry market size, $ bn FY24E FY25E approach outlined in the interim budget,
300
Nominal GDP (₹ lakh crore) 200 4 2 0 -2 Per cent) high energy prices and infl ationary pres- Source: Department of Chemicals and Petrochemicals, The Brokerage towards productivity and resilience in
this Budget envisages sustained efforts
8
in October 2023, as well as persistent
250
6
‘Atmanirbhar Bharat’ and ‘Make in India’ increasing operating costs due to higher agriculture (for achieving food security
sures that have generally slowed down
have played a crucial role in driving freight.
for the country and boosting the govern-
international trade. Manufacturing and
150
this sector forward.
ment’s goal of doubling farmer’s income),
agriculture sectors are some of the key
100
Growth and expansion of the sector
employment and skilling, women-led deve-
The chemicals industry is pivotal lopment, enhancement of digitisation and
Moreover, the shifting landscape of
50
of the economy. The chemical industry
-6
-8
0 -4 contributors to the growth and resilience global affairs, including trade disputes in realising India’s ambition to become technology, innovation and infrastructure
in cohort with the manufacturing and
FY20 FY21 FY22 FY23 FY24 and stringent environmental policies in a $5-tn economy. Hence, it is essential growth, and credit fl ows.
(2nd RE) (1st RE) (PE) agriculture sectors, has emerged as a vital China, has prompted multinational cor- for companies to strengthen backward
Fig. 1: Carry-forward of momentum of economic growth component for our country’s economic
Source: Statement 13: Annual and Quarterly Estimates of GDP at Constant Prices, and Annual and growth and development. porations to seek out other countries like and forward integration, innovate with Budget 2024 seeks to achieve the
Quarterly Estimates of GDP at Current Prices 2011-12 Series, National Accounts Data, MoSPI; Note:RE – India for material sourcing to mitigate new product development, and leverage above through the following initiatives:
Revised Estimates, PE – Provisional Estimates The Indian chemicals sector is ex- supply chain vulnerabilities associated cutting-edge technologies. In addition,
pected to reach $300-bn by FY2025 with dependence on a single nation. Cou- growth and expansion of the sector will be Productivity and resilience in
Manufacturing GVA 5.3 and $1-tn by FY2040. Globally, India is pled with this, growing domestic demand aided by government initiatives such as: Agriculture
As a country susceptible to the
Chemical products 9.6 the 4th largest producer of agrochemi- in chemical end-use sectors such as con-  Improving policies regarding power, impact of climate change, there has been a
sumer goods, healthcare, etc. has augured
water and energy, to enable unin-
Wood products and furniture 9.2 cals and 6th largest producer of chemi- well for the chemical industry in India. terrupted production, safe transpor- need for adaptive measures in agricul-
cals, thereby positioning the country as
Transport equipments 6.0 a key player in the international market. tation and storage; ture and conservation efforts to miti-
Metal & metal products 6.7 What has not worked for the sector?  Faster registration and clearance for gate the detrimental effects of climate
Pharma and medicinal chemicals 8.3 What has worked for the growth Having said the above, often the sector domestic or foreign entities aiming change on natural habitats, vegetation,
to set up greenfi eld projects;
Machinery and equipment 6.5 of the sector? faces key challenges such as inadequate Tax incentives for the private sector; and vital bio-resources. To support the
same, the government has announced a
infrastructure facilities (including logis-
Apart from the demographic divi-
Rubber & plastic products 7.7 dend of the country and political stabi- tics and storage/warehousing), environ-  Dedicated skill development pro- suite of robust strategies, including the

Non-metallic mineral products 5.9 lity, the initiatives taken by the govern- mental and safety issues, elevated prices grammes; review of agricultural research frame-

Food products 4.7 ment to support the industry have for fundamental raw materials such as  Implementation of PCPIRs and works to develop crop varieties resi-
Leather and related products 4.7 been commendable. Policies such as natural gas and crude oil, high cost of Chemical Parks for downstream players; lient to climate variability, release of
Beverages and tobacco 0.0 the Public Procurement (Preference to capital, and excessive market fragmen-  PLI for critical intermediaries; and 109 high-yielding and climate-resilient
tation in certain segments. Moreover, the  Incentives for promoting adoption varieties across 32 fi eld and horticul-
Electronic products 5.4 Make in India) policy; establishment sector grapples with infl ux of low-priced of environment friendly manufac tural crops, and fi nancial backing for
of Plastic Parks and Centres of Excel-
Textiles and apparels 3.0 lence; Chemicals Promotion & Deve- chemicals from China. turing practices, specifi cally targeted irrigation and fl ood control initiatives.
Coke & refined petroleum products -4.0 lopment Scheme; the proposed new for the chemicals. These reforms are poised to signifi cantly
Petroleum, Chemicals and Petrochemi- One of the most pressing concerns enhance the agrochemicals sector.
Fig. 2: Average annual growth in components of manufacturing GVA in constant prices cals Investment Region (PCPIR) Policy for the industry is the shrinking gross The Union Budget 2024
(FY14 to FY23), % margins, resulting from the escalating The Union Budget 2024, resolutely Cultivation of certain grains such as
Source: Survey calculations based on National Account Statistics 2024, MoSPI 2020-35; and Production Linked Incen-
Excludes electrical, electronic, computer and transport equipment tives (PLI) for allied sectors under costs of raw materials, coupled with aimed at realizing the vision of Viksit paddy gives rise to methane emissions.
166 Chemical Weekly October 1, 2024 Chemical Weekly October 1, 2024 167
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