December 28, 2001

YEAR END REVIEW-2001

'42'

    Delicensing of 19 out of 22 items under compulsory license, increasing growth rate of pharmaceutical exports, permission of FDI upto 100% through the automatic route, setting up of Gandhar Complex of Indian Petrochemical Corporation Ltd.(IPCL) are some of the highlights of the activities of the Department of Chemcials and Petrochemicals, Ministry of Chemicals & Fertilisers for the year 2001. The details of the achievements for the year are as under:-

    In line with the policy of the Government to continue with the reforms in the industrial sector to create an investor friendly environment, this Department reviewed the need to continue or otherwise of the twenty two items kept under the compulsory licensing list. Pursuant to the initiative of this Department, Department of Industrial Policy & Promotion has de-licensed nineteen of the twenty-two items which were kept under compulsory license. The three items which have been retained under the compulsory licensing are Hydrocyanic acid and its derivatives, Phosgene and its derivatives and Isocyanates and Diisocyanates.

    In order to further increase Foreign Direct Investment in the Pharmaceutical Sector, the Government further liberalized its policies thereby permitting FDI upto 100% through the automatic route. Earlier this facility was available only upto 74%.

    "India Chem 2000", an International exhibition and conference, a Government-Industry initiative, successfully completed in October, 2000. The next event is planned to be held between September 18 and 21, 2002. The effort will help integrate Indian Chemical, Petrochemical and Pharmaceutical Industry with the global Industry.

    IPCL has set up the Gandhar Gas Cracker Complex in the Bharuch District of Gujarat, a notified backward area, at a cost of around Rs. 4300 crore to augment its production of petrochemical products. The second phase of the complex was commissioned in 1999-2000. Since it is a major project, which would give fillip to rapid industrialization and development of the area, the Minister (Chemicals & Fertilizers) dedicated the complex to the nation on 16.01.2001.

    The Government has constituted a High Level Task Force on Petrochemicals to advise the Government on futuristic approach to petrochemical industry, fiscal/non-fiscal policy initiatives necessary for creating competitive industrial base, infrastructure, feedstock etc. The Task Force comprises eminent persons from the field of industry, finance, academics, etc. With a view to assess the competitiveness of domestic petrochemical industry, Government has commissioned a study on "Effective Rate of Protection (ERP)" by National Council of Applied Economic Research (NCAER).

    A sub-group was constituted under the Chairmanship of Joint Secretary (Petrochemicals) to study various facets of plastic processing industry and suggest measures which would help domestic plastic processing industry to modernize and face global challenge. The sub-group has submitted its report. The recommendations of the Sub-Group are under consideration of concerned Ministries/Departments.

    The Indo-Russian Working Group on Pharmaceuticals has been an important forum for strengthening cooperation in the field of drugs and pharmaceuticals. The Fifth Meeting of the Working Group was successfully held on January 10, 2001 in Moscow. The Russian side of the Working Group was led by Ms. T.I, Stukolova, Deputy Minister of Health of the Russian Federation and the Indian side was led by Shri V.N. Kaul, the then Secretary, Department of Chemicals & Petrochemicals. The meeting agreed on a wide range of issues relating to cooperation in pharmaceuticals beneficial to both the countries. Seventeen Indian Companies were exempted from batch by batch inspection of pharmaceuticals before exports to Russia. Cooperation between Indian testing labs and the Russian testing agencies was another area. In addition, setting up of joint ventures and transfer of technology, cooperation with National Institute of Pharmaceutical Education and Research (NIPER) were other identified areas.

    Keeping in view the increased interest of the Belarusians in the Indian Drugs and Pharmaceuticals, a separate Indo-Belarusian Joint Working Group on Drugs and Pharmaceuticals and Healthcare was constituted in 2001 and it held its first meeting at New Delhi on 20^th February, 2001. The Indian side was led by Shri V.N. Kaul, the then Secretary, Department of Chemicals and Petrochemicals and the Belarusian side by Mr. Alexander S. Kourchenkov, Vice-Minister of Public Health, Government of Belarus. Several areas were identified for cooperation. These include supply of Indian bulk drugs and pharmaceuticals to Belarus, setting up of joint ventures, supply of technology and equipment to Belarusian pharmaceutical companies, Joint Research and Development of Drugs.

    PCL, a Society registered under the Multi-State Cooperative Societies Act, 1984, was continuously incurring losses from 1994-95. Efforts were made for the revival of the Society. However, its rehabilitation was not found to be techno-economically viable and therefore, the Government on 30.10.2000 decided to wind up the Society. Accordingly, the employees of the Society were released on 17.03.2001 with the benefits of Voluntary Separation Scheme. The Society stands closed from 18.04.2001. This has helped setting at rest the uncertainties in the minds of the employees and reducing infructuous expenditure of the Government.

    The exports of Drugs, Pharmaceuticals and Fine Chemicals have shown the following growth rate from 1997-98 to 2000-01: -

(Rs. Lakhs)

1997-98 1998-99 1999-2000 2000-2001

541931 625607 723016 872989 (Provisional)

    The trends of growth indicate 15.544% in 1998-99, 15.57% in 1999-2000 and 20.73% in 2000-2001 (Provisional). Apart from maintaining an excellent growth rate in exports, a commendable feature of the exports is that 32% of the share of total exports is going to twelve highly developed countries like USA, Canada, Mexico, Germany, UK, Italy, Netherlands, France, Japan, Australia, Brazil and Argentina.

    The NPPA has fixed/revised the prices of 409 scheduled formulation packs from January 1, 2001 to December 10, 2001. 13.

    The Chemical Industry is facing a serious challenge in the form of stiff competition in the post-WTO liberalized economy. To be successful in the global competition, the Industry would need a vision into the future and a multi-disciplinary thinking for policy formulation. With this in view, this Department has set up a Task Force on Chemical Industry in July, 2001 under the Chairmanship of Dr. A S Ganguly, Chairman, ICI Ltd. to identify areas of competitive advantages of the Indian chemical industry in the context of the emerging global scenario; formulate policy initiatives required to further strengthen areas of competitive advantages; examine the issue of "dumping" in the chemical sector and suggest remedial measures including appropriate levels of tariffs, etc.

• Foreign Direct Investment (FDI) upto 100% through the automatic route has been permitted in the Pharmaceutical Sector. Earlier this facility was available only upto 74%.

• The exports of Drugs, Pharmaceuticals and Fine Chemicals have shown the following growth rate from 1997-98 to 2000-01: -

(Rs. Lakhs)

1997-98 1998-99 1999-2000 2000-2001

541931 625607 723016 872989 (Provisional)

• The NPPA has fixed/revised the prices of 566 scheduled formulation packs between 1^st April, 2000 and 15^th August, 2001. Prices in respect of 364 packs were reduced and those in respect of 76 packs were increased.

• The Department has set up a Task Force on Chemical Industry in July, 2001 to identify areas of competitive advantages of the Indian chemical industry in the context of the emerging global scenario; formulate policy initiatives required to further strengthen areas of competitive advantages; examine the issue of "dumping" in the chemical sector and suggest remedial measures including appropriate levels of tariffs, etc.

• IPCL has set up the Gandhar Gas Cracker Complex in the Bharuch District of Gujarat, a notified backward area, at a cost of around Rs. 4300 crore to augment its production of petrochemical products. The second phase of the complex was commissioned in 1999-2000 and dedicated to the nation on 16.01.2001.

• High Level Task Force on Petrochemicals to advise the Government on futuristic approach to petrochemical industry, fiscal/non-fiscal policy initiatives necessary for creating competitive industrial base, infrastructure, feedstock etc. has been constituted.

• Various facets of plastic processing industry and measures to help the domestic industry to modernize and face global challenge are under consideration.

• The Indian Chemical Weapons Convention (CWC) Act has been approved by the Parliament and has received the assent of the President. The rules under the Act are under preparation.

• "India Chem 2000", an International exhibition and conference to integrate Indian Chemical, Petrochemical and Pharmaceutical Industry, a Government-Industry initiative, successfully completed in October, 2000. The next event is planned to be held between September 18 and 21, 2002.