To incentivise investments in chemicals & petrochemicals, government circulates draft cabinet note

In a yet another push to attract investments and to give an advantage to domestic manufacturing, department of chemicals and petrochemicals (DCPC), under the aegis of ministry of chemicals and fertilizers on Friday has circulated a draft cabinet note to incentivise investments made in petroleum, chemical and petrochemical investment region (PCPIR).

Sources privy to the developments told CNBC-TV18 that the draft cabinet note circulated for inter-ministerial consultations to 24 ministries/departments for comments, post which a formal proposal will be made to the union cabinet for a go ahead.

Through this new revised proposal for PCPIRs, government aims to attract Rs 23 lakh crore of investments and provide employment to about 40 lakh, over the next 5-7 years, sources in the know told CNBC-TV18.

According to multiple people familiar with the development, the proposal is to dole out cash incentives to increase production in PCPIRs and give an attractive rate of 17.16 percent of corporate tax to those who set up new plants or for new companies who come and start their set up in these regions, provided that the production begins on or before March 31, 2027.

“The proposal also entails a government assistance of about Rs 2,500 crore to assist overall infra development along with import duty protection for domestic industry for five years. The government has also proposed to relax the minimum area requirement from current 250 square kilometres to 50 square kilometres,” said people familiar with the matter.

The PCPIRs were created in the country to reap the benefits of co-siting, networking and greater efficiency through the use of common infrastructure and support services. They were aimed to have high-class infrastructure, providing a competitive environment conducive for setting up businesses. These regions would thus result in a boost to manufacturing, augmentation of exports and generation of employment.

A PCPIR is a specifically delineated investment region with an
area of around 250 square kilometres planned for the establishment of manufacturing facilities for domestic and export led production in petroleum, chemicals & petrochemicals, along with the associated services and infrastructure.

The DCPC aims to formulate and implement policy and programmes for achieving growth and development of the chemical and petrochemical sectors in the country. DCPC also facilitates to foster the spirit of public-private partnership for overall development of above mentioned sectors of the industry.