Union Budget 2022-23: Make in India 2.0 mission focuses on 27 sectors, government to broaden base to include more sectors
Indian Union Budget 2022: Necessary Mechanisms to Accelerate the Growth of the Specialty Chemicals Sector. Image courtesy of Man vyi/Wikimedia Commons
The disruption caused by the COVID-19 pandemic over the past two years has wreaked havoc on India’s economy and revealed the country’s dependence on China for a range of products ranging from raw materials for the sector manufacturer to finished products.
Moreover, growing differences with the neighboring country and anti-China sentiment around the world peaked during this period after the pandemic stifled global trade. He acted as a catalyst for the Indian government to push for ‘Make in India’ and ‘Aatmanirbhar Bharat’ – the two most important measures taken by the government led by Narendra Modi.
Over the past two years, the Union Government has adopted several measures to ensure that the country remains on the right path towards self-reliance and ‘Make in India’.
Domestic chemical players can secure a significant share of the global market
Interestingly, the global specialty chemicals segment market is expected to touch $64 billion by 2025 and domestic chemical players can secure a major share of this market, provided India plays its cards right.
In its attempt to make India a $5 trillion economy, the Center has rolled out various programs and stimulus packages in sectors like manufacturing, IT, etc. The chemical sector also needs liberal laws and fiscal relaxation mechanisms to accelerate its growth. Before the onset of the pandemic, India’s chemical industry was expected to attract investment worth Rs 8 lakh core by 2025. Through a sustained effort of “Make in India” and focus on building capacity in chemical manufacturing processes, the country is likely to reach the projected figure. .
PLI programs for the sector to open capex opportunities
Realistically, to achieve this goal, we expect the government to incentivize the specialty chemicals sector with strategic PLI programs to inject anticipation and growth into the sector. Furthermore, the PLI will usher in a new wave that will open up opportunities for huge capex in the industry, driving steady growth. Overall, it would be a huge building block for the rest of the industries as the specialty chemicals segment provides basic and crucial raw materials for all the downstream industries. This, coupled with the continuation of a low interest rate cycle, will ensure that various companies invest and go for huge investments.
With a robust and self-sustaining PLI program and low interest, India will be well on its way to becoming self-sufficient and globally competitive in the specialty chemicals value chain.
Technological advances to boost the manufacturing process
Another aspect that 2022 will usher in is the advent of technologies such as AI, automation, 5G and its impact on the manufacturing process. It will also be an important year for the IT and technology sector, with key announcements likely in the areas of 5G, connectivity, startups and telecommunications.
The need of the hour for the chemical sector is to weigh these technological advances and adopt them early. Profitability, sustainability and ESG are some of the metrics in which technology helps connect the dots. It is imperative for an industry like chemicals not only to streamline its manufacturing processes, but also to deploy these advanced technologies in research and development.
For example, today’s ESG compliance officers, activists, and big chemical companies are looking for ways to invest in other ways to manufacture specialty chemicals, reduce carbon footprints, reduce operating costs and to ensure optimum use of energy. Likewise, automation and data analysis will reduce waste while ensuring optimal use of resources.
Broaden the base of the Make in India 2.0 mission
From a macro perspective, the pandemic has been very disruptive and each wave has brought its own set of challenges. Frequent shutdowns, global and local travel restrictions and other disruptions have fundamentally changed consumer behavior across all categories, with a significant impact on manufacturing and the supply chain. Economic recovery from the COVID shock is still delicate and will dictate fiscal support.
The Make in India 2.0 mission focuses on 27 sectors, and the government needs to broaden the base to include more sectors. It should focus on investment facilitation and the establishment of national investment programs. We look forward to announcements that will highlight the progress of the manufacturing sector as a whole.
The digital transformation of production units or factories is a new reality, with the pandemic paving the way for less reliance on fragile labor and physical space.
We are optimistic about the upcoming budget and look forward to government support measures to revive consumption for economic growth.
The author is the Chairman and Managing Director of Meghmani Finechem.
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