Draft National Chemical Policy 2012

June 12, 2013 June 12, 2013

Draft National Chemical Policy was released by UPA Government in 2012. Its key features are as follows:

Aims and Objectives

Increase Investments by capacity addition and ensuring feedstock and infrastructure
Increase domestic demand and consumption of chemicals
Adoption of cluster approach for development
Technology upgradation
Promote R& D for sustainability and green technologies
Promote HRD to build skilled human capital
Establish a Chemical Standard Development Organisation (CSDO) to enable the growth and development of a globally competitive, high quality chemical sector in India and also to meet the international standard/ norms, and their enforcement
Set up National Chemical Centre for promoting an integrated and holistic growth & development of the sector
Striving towards a disaster resistant and resilent chemical sector

Vision for Indian Chemical Industry

Growth and development of the chemical sector in environment friendly manner
Achieve 11-15% Growth rate by 2017

Vision for Feedstock

India faces significant challenges in terms of feedstock availability and prices. Organic chemicals based on ethylene/ propylene, xylene, naphthalene and their derivatives are imported in large quantities due to non-availability of cost-competitive feedstock. Apart from large imports of methanol (about 80% of domestic demand in 2009), India also imports significant volumes of sulphur, urea, ammonia, phosphorous and potash, which are key raw materials for various downstream sectors. The national policy envisages the following in this context:

Set up world class capacity plants for feedstock’s
A strategic plan to secure its feedstock from feedstock rich countries with competitive supplies
Develop a policy for allocation of feedstock to best suited products (gas for fertilizers, coal for power, and naphtha for petrochemicals).
Boost domestic feedstock supply by ensuring adoption of the “consortium cracker” approach. Every PCPIR must have a Naphtha cracker which produces all the building blocks (ammonia, methanol, ethylene, propylene etc.).
Set up support funds for adoption of certain capital intensive technologies, such as coal gasification (simultaneously production of power and fertilizer based on coal gasification) and coal to methanol/ olefins/ acetic Acid.
Provide incentives for using bio-based raw materials such as bio-ethanol from agro wastes and molasses for chemical feedstock and Glycerine.

Vision for Infrastructure

Revisit the present Petroleum, Chemicals and Petrochemicals Investment Regions (PCPIRs) policy in order to make them more effective
Exclusive chemicals parks need to be earmarked in the PCPIRs
Infrastructure such as roads and ports near the SEZs/ PCPIRs
Special fund would be setup to ensure availability of finance to improve infrastructural facilities of SMEs and creating infrastructure for SMEs close to large plants;

Vision for Chemical clusters

There is a need to form clusters with provision of common infrastructure facilities to address the constraints of common effluent treatment, transport linkages, including roads, power supply, water facilities, etc.
For infrastructure related problems of the existing industry, the Department of Chemicals and Petrochemicals (DCPC) considers to set up a “single window support mechanism” to expedite the process in consultations with the concerned Ministries/Depts.

Vision for Legislative Reforms

At present, there are multiple legislations in India governing the chemicals industry that fall under the purview of different Ministries. Apart from multiplicity of regulations, there are no specific Indian legislations pertaining different aspects.
There is a need for adopting a holistic approach towards chemical legislations. A centralized, nodal body, titled – ‘National Chemical Centre’, to be established by DCPC, will be responsible, inter-alia, for working on legislations as well as for monitoring their implementation.
The REACH (Registration, Evaluation, Authorisation and Restriction of Chemicals) legislation, enacted by the European Union with the main aim of protecting human health and environment from the hazardous effects of chemicals and to have a sustainable chemical policy replaces around 40 different environment related legislations. Several other countries such as Australia, Canada, Japan, China, etc. are also adopting a similar policy to retain their position in the global market. India may also have to pursue similar measures.

Technology Up-gradation & Innovation Fund

To remain globally competitive and comply with requirements like REACH, the Indian chemical industry needs to upgrade its technology to meet world standards and show improved performance in global trade. The government would establish a “Technology Up-gradation & Innovation Fund” (TUIF) that can address specific technology issues, faced by the industry.
The fund should also support setting up of common chemicals infrastructure (e.g. effluent treatment plants, chemical waste disposal plants, etc.), which would benefit industries and the environment. For raising fund , it is proposed to levy an “Chemical Up-gradation & Innovation Cess” at the rate of 0.5% ad-valorem and may be collected by the Excise Authorities, and then subsequently transferred to the DCPC.

R&D Vision

A Chemical sector council, consisting of experts, would be set up, which will have representatives from the government, academia, chemical companies, industry associations and reputed research/ educational institutes.
It will carry out technology and product development forecast and evolve and periodically update the national program for technology/product development. A fund for chemical innovation would be established.

Dedicated Clusters

Dedicated clusters for chemical industry would be created in regions with large share of chemical industries (e.g. in Gujarat, Maharashtra, Tamil Nadu, Andhra Pradesh) and similarly universities focused on chemical engineering (e.g. ICT, IIT Mumbai) would be short listed to develop innovation hubs for chemical industry.

Sustainability

Government would encourage companies to seek “Responsible Care Certification” and empanel reputable auditors for the same.
A mechanism to incentivize the compliant companies such as fast track clearances could be set up and priority loans to those who meet environment standards could be facilitated. Further, the Government could facilitate the setting up of more Common Effluent Treatment Plants (CETPs), thus supporting SMEs in adhering to Safety, Health & Environment (SHE) norms.

Chemical Standard Development Organisation (CSDO)

Chemical Standard Development Organisation (CSDO) to be established under DCPC, which shall be responsible for-

Ensuring compliance with chemical standards, including safety norms, by evolving & implementing a comprehensive Certification and Inspection frame-work;
Performing functions relating to the Disaster Management in the chemical sector
Setting up an “Institute of Chemical Safety” and conducting training courses in this area;

National Chemical Centre

A National Chemical Centre would be formed to provide an effective regulatory framework and adequate safeguards to ensure fair competition, and protection of industry as well as consumer interests.
It will also study the trade practices, international chemical sector scenario and maintain an inventory of the Indian chemical sector, containing data on production, consumption, imports, exports, toxicological properties,