Q&A: M Raman, Ministry of Chemicals

'We are taking feedback on policy to increase investments'

With the chemical industry grappling with sanctions overseas and a flood of imports, M Raman, secretary in the department of chemicals and petrochemicals, talks of his charge to Anindita Dey. Edited excerpts:

Sourcing of raw material for the chemical industry is a worry, especially when West Asian companies are diverting their facility of cheap crude into downstream manufacturing of polymers, chemicals, etc. How would you address this?
Raw materials for chemicals are importable under Open General Licence (OGL). Customs duty for chemicals is at 7.5 per cent and most of the hydrocarbon building blocks like ethylene, propylene, benzene, toluene and xylenes are at 5 per cent. During the Budget exercise, the department takes into account the domestic availability and demand for raw materials and recommends any needed correction in customs duty.

 

Any plan on the constraints of capacity, by triggering consolidation within the industry?
Government has proactively formulated the Petroleum, Chemical and Petrochemicals Investment (PCPIR) Policy, an infrastructure-driven one to address these constraints. Consolidation within the industry is a global phenomenon. Indian industry has also witnessed consolidations.

Foreign direct investment is allowed up to 100 per cent in chemicals. Any plans to tweak these norms to make it more technology-driven for manufacturing of speciality products?
There are no specific-entry barriers for speciality products. If specific requirements are needed, it will be addressed through a consultation process with other ministries.

There have been numerous instances of other countries banning chemical products, based on their research and inputs. Any policy to counter these problems?
In consultation with industry, we’re focusing on development of a comprehensive plan to address these concerns and build capacities to face the growing instance of non-tariff barriers for exports.

You are working on a new petrochemicals policy. There is already an existing PCPIR policy for the sector which encourages public-private partnership in setting up industry in a notified PCPIR zone. What will be the objective of the review?
The department has already brought out a National Policy on Petrochemicals, approved by the government in April 2007. As a follow up, we formulated some schemes after due consultation with all stakeholders and state governments, and the Planning Commission. We’re trying to obtain feedback from different states where PCPIRs have been approved, to undertake any mid-term corrections so as to ensure greater investments.

In the existing PCPIR, many anchor investors have only expressed their intent for investment but projects are taking a lot of time. The nature of the business is also time-taking. At your end, is there a policy thrust to fast-track these investments?
In PCPIR, Gujarat, Opal is going ahead with investment for its C2/C3 extraction unit, along with a downstream plant, with a total investment of approximately Rs 19,000 crore in phases. In PCPIR, West Bengal, Indian Oil Corporation Limited has already completed the expansion of its refinery from 6 million tonnes per annum to 7.5 mtpa. In PCPIR, Orissa, IOC’s refinery is likely to be commissioned by March 2012.

However, as I mentioned, we are in the process of examining the possibility of any mid-course shift in the focus of the policy to attract greater investments.

For improving of exports, is there any policy in line with the export incentives given to the plastic and chemicals industry in the recently announced initiatives of the government, either for a specific area or products in the industry?
Export schemes such as Advance Authorisation Scheme, Duty Entitlement Pass Book Scheme and Duty Draw Back Scheme are already in operation. There is no specific request from the industry at this time for additional incentivisation of exports.