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Rs 25000 cr plan to cut dependence on China for key chemicals

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(This story originally appeared in image on Sep 18, 2020)

NEW DELHI: With the aim to reduce dependence on China for import of chemicals, the government is planning a production linked incentive scheme to boost local manufacturing of some of the key chemicals used in pharmaceuticals, insecticides and in other critical industrial usage, sources said.

In a series of recent meetings, the department of chemicals has identified around 75 critical chemicals and more are likely to be added to the list. The proposal for the incentive scheme includes offering 10% of production value as incentive. According to the proposal, the scheme will have an outlay of Rs 25,000 crore over the next five years.

The proposed scheme assumes significance in the wake of the ongoing tension between the two countries — India and China. India imports chemicals worth over Rs 1.5 lakh crore, of which around 85-90% comes from China, an official said. These chemicals are used in manufacturing of active pharmaceutical ingredients, insecticides and other industrial processes.

“Chemicals are essential products used in many industries including medicines. While we have already started a PLI scheme for manufacturing pharma APIs, we realised that there are some key chemicals – which are still being imported from China – for use in manufacturing these APIs. Hence, the need for complete backward integration to ensure we are not dependent on imports,” a senior official said. The department of chemicals has also constituted a committee on the matter and the final proposal for the PLI scheme will be soon submitted to the department of expenditure before taking it to the Cabinet.

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