India to set up tech upgrade fund for SME chemical units

22 February 2013 07:47  [Source: ICIS news]

KOLKATA (ICIS)--India’s Ministry of Chemicals and Fertilizer will be setting up a $45m (€34m) technology upgradation fund of chemical producers in the small and medium enterprises (SME) sector, a ministry official said on Friday.

It has been proposed that the fund will be created from 50% contribution by the Indian government and the balance from a cess to be levied on chemical production by all producers in the industry.

The process of seeking government budgetary allocation has already been started by submitting the proposal to India’s Planning Commission and following latter’s approval, it will be forwarded to the Ministry of Finance for necessary provisioning in the budget, the official added.

“This is a welcome baby step,” Anil Bharadwaj,  Secretary General, Federation of Indian Micro, Small & Medium Enterprises (FISME) told ICIS.

“Unlike small and medium auto ancillary, engineering and electrical companies which have evolved to be global players, downstream chemical units were yet to reach that stage despite huge potential.

According to data of Ministry of Micro, Small, Medium Enterprises, there were more than 57,000 units engaged in production of chemicals and plastics classified as MSME.

“Also, technological obsolescence in chemical production and process was  faster than engineering and electrical sectors and any support to small and medium chemical enterprises was most welcome,” he said.

Bharadwaj’s main concern was the small size of the fund. “A similar technology upgradation fund for the Indian textile sector was set up with a corpus of $4.5bn.” he added.

One of the suggestions received from SME chemical units was to focus the fund on region-specific clusters of downstream chemical plants, the ministry official said.

For example, chemical unit cluster near Vadodara, Vapi, Ankleshwar and Dahod in chemical, petrochemical and refining hub of western Indian province of Gujarat had shown interest in adopting  membrane-based green technology for their production process to make units pollution free.

The Indian chemical industry accounted for about 14% of India’s industrial production and 10% of total exports. Growing at 15% per year, the chemical industry contributed 7% of the country’s Gross Domestic Product (GDP), according to government data.

($1 = €0.76)

By: Ajoy K Das
+65 6780 4359

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