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Rationalise duties to boost investment in chemical industry: Sudhir Shenoy

More clarity in IPR regulations would benefit the industry & encourage R&D activities in India

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Sudhir Shenoy, CEO, Dow India

Last Updated : Jan 31 2017 | 5:34 PM IST

The chemical industry can play a major role in making India a global manufacturing hub. Realising this potential, the Government has already included the chemical industry amongst the key sectors under its ‘Make in India’ initiative. At present, the Indian chemical industry accounts for less than 16 percent of India’s manufacturing sector, according to Assocham.

The outlook for the Indian chemical industry is positive over the long term, considering government announcing a number of measures to improve competitiveness in the chemical sector.

A lot has been said about the inverted duty-structures in the recent times. Incentivising direct investment by optimising duty structures will further improve ease of doing business and create a level playing field in the chemical industry. A higher tax on the finished good than on components and raw materials, and incentives on localising manufacturing of critical raw materials will certainly encourage local manufacturing. Implementation of structural reforms like Goods and Services Tax (GST), are also critical for the economy. GST will potentially improve efficiencies and reduce costs.

Clearer and strongly implemented intellectual property laws at par with international standards are required to bring new research-based products. More clarity and ease in IPR regulations and patent registration process as well as providing incentives for companies to uphold and comply would benefit the industry and boost the R&D activities in India.

Furthermore, Indian oil refineries are starting to make the transition to meet new emission norms to higher international standards of more sustainable practices. There are cost effective solutions available instead of heavy capital investments, perhaps a budgetary allocation for partially funding or incentivising sustainable technology solutions could make the transition efficient.

According to FICCI, there is strong growth outlook for the Indian chemical industry estimated at 10 percent CAGR by 2020. The impact of demonetisation on the economy and chemical segment’s growth prospects is yet to be seen. Overall, I see the sector increasingly moving from a commodity player to a value based solutions provider. This upward integration will help both big as well as small players by creating more avenues to foster higher collaboration across the value chain.
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Sudhir Shenoy is chief executive officer of Dow Chemical International Pvt Ltd (Dow India)