Budget

Post-Budget 2024 Analysis Implications for India s Chemical Industry

Team Chemical Market

23 Jul 2024

• Specialty Chemicals: The focus on green energy and storage solutions will likely boost demand for specialty chemicals involved in battery production and energy storage systems. Companies specializing in these areas may see growth opportunities.
• Fluorospar Reduction: The reduction in customs duty on Fluorospar from 5% to 2.5% will lower production costs for fluorochemicals used in pharmaceuticals, energy solutions, and agrochemicals, enhancing competitiveness and profitability.

• Bulk Drug Parks: The allocation of ₹1,629 crore for Bulk Drug Parks under Production Linked Incentive (PLI) schemes aims to boost pharmaceutical manufacturing, indirectly benefiting the chemical sector through increased demand for raw materials.
• Department Funding: The ₹192.21 crore allocated to the Department of Chemicals and Petrochemicals is expected to support sectoral advancements and regulatory improvements.
• PCPIR Investment: The Petroleum, Chemicals, and Petrochemicals Investment Region (PCPIR) in Paradip, attracting ₹73,518 crore in investments, highlights the potential for regional growth and job creation, enhancing the local chemical industry’s ecosystem.

• Construction Chemicals: The 11% increase in capital investment outlay to ₹11.1 lakh crore, with additional focus on infrastructure, is likely to drive demand for construction chemicals. This includes materials for industrial parks and residential developments.
• Industrial Parks: The establishment of 12 new industrial parks under the National Industrial Corridor Development Programme will create investment-ready environments for chemical manufacturers.
• Housing Projects: The development of three crore additional houses, supported by a ₹10 lakh crore investment, will stimulate demand for construction-related chemicals.

• Innovation Boost: The ₹1 lakh crore allocated to R&D will support innovation in chemical processes and product development. This funding will facilitate advancements in chemical technology and process optimization, potentially leading to more efficient production methods and new product lines.

• Workforce Expansion: Employment incentives, including wage subsidies and EPFO contributions, will help chemical companies manage labor costs and expand their workforce. The comprehensive internship scheme will provide training opportunities, addressing skill shortages in the sector.

• Increased Costs: The increase in BCD rates for Ammonium Nitrate and PVC Flex films will raise production costs for these chemicals. Similarly, the higher BCD rate for laboratory chemicals could impact pricing structures.
• Reduced Costs: Conversely, the reduction in BCD for critical minerals and specific components used in manufacturing will lower costs for certain chemical products, potentially enhancing competitiveness in these areas.