Government Contemplates Extending PLI Scheme to Chemicals and Petrochemicals Industries

Author: Sunil Tyagi, Managing Partner & Sangini Tyagi, Senior Associate at ZEUS Law

Published in on 17th August 2023

In a move to bolster the chemicals and petrochemicals sectors, the Indian government is contemplating an extension of the Production-Linked Incentive (PLI) scheme. The proposed extension aims to provide impetus to these industries, fostering growth, innovation, and competitiveness in the global market. This strategic step comes as part of the government’s vision to strengthen the manufacturing landscape and drive economic recovery post the challenges posed by the pandemic.

The PLI scheme is being implemented in various sectors such as electronics, pharmaceuticals, and telecom, propelling India’s position as a preferred investment destination. The government now plans to replicate this success in the chemicals and petrochemicals domains, recognizing their significant contributions to the country’s economy and the potential for further expansion.

The chemicals and petrochemicals industries are vital cogs in India’s economic machinery, with a broad spectrum of applications across diverse sectors such as agriculture, manufacturing, construction, healthcare, and consumer goods. By incentivizing and encouraging investments in these sectors, the government aims to enhance their manufacturing capabilities, promote innovation, and achieve self-sufficiency in critical chemical products.

Under the proposed extension, eligible companies operating in the chemicals and petrochemicals segments will be offered financial incentives based on their incremental sales revenue and investments in new technologies and research and development. These incentives are designed to boost production capacities, encourage the adoption of cutting-edge technologies, and attract both domestic and foreign investments.

The scheme is set to encourage indigenous production, reduce import dependence, and promote the ‘Make in India’ initiative in the chemicals and petrochemicals sectors. By reducing reliance on imports and promoting domestic production, the country can strengthen its position in the global supply chain and achieve long-term economic stability.

Furthermore, the extension of the PLI scheme is expected to create numerous employment opportunities, contributing to India’s goal of inclusive and sustainable growth. The growth of these sectors will not only lead to direct job creation but also foster ancillary industries, thus generating a multiplier effect on the overall economy.

In devising the PLI scheme in the chemicals and petrochemicals sectors and for ensuring effective implementation of the same, the government is in process to work closely in collaboration with industry stakeholders, associations, and experts. It will lead to addressing sector-specific challenges, identifying priority areas, and aligning incentives with the broader goals of economic development and sustainability.

By encouraging investments in green technologies and sustainable practices, the government aims to enhance the environmental performance of the industries. This emphasis on sustainable growth will align with India’s commitment to reducing carbon emissions and mitigating the impact of climate change.

The potential extension of the PLI scheme to the chemicals and petrochemicals sectors marks a significant step in transforming India’s manufacturing landscape. This forward-looking approach by the government is set to boost domestic production, promote innovation, and create a favourable business environment for both local and international investors. Through strategic collaboration between the government, industry, and various stakeholders, India is poised to fortify its position as a global leader in the chemicals and petrochemicals industries, contributing to the nation’s overall economic prosperity.

(This Article is solely for information purposes, does not constitute legal or professional advisory and should not be relied upon or used as a substitute for legal advice from attorney.)

About the Authors: Mr. Sunil Tyagi, has been a practicing lawyer for over 30 years and is the Managing Partner and Co-founder of ZEUS Law Associates. He leads the Real-Estate & Infrastructure, Corporate & Commercial Law and Compliance divisions. He is well versed in the intricacies of Indian Civil Law, Business and Commercial Law and regularly advises foreign investors as well as Indian entrepreneurs on their business and legal strategy with respect to investment in India.

Sangini Tyagi, is a Senior Associate at ZEUS Law and works in the Corporate & Commercial and Infrastructure & Real Estate practice vertical.

ZEUS Law Associates is an ISO certified full service corporate commercial law firm with a team of dedicated and experienced lawyers well versed in handling domestic and cross border transactions across sectors, jurisdictions and regulatory landscapes. The firm’s distinct practice areas include Corporate & Commercial Law, Real Estate & Infrastructure, Litigation, Alternate Dispute Resolution, Indirect Tax and NRI Services.