[ Vol1-Index ] - [ Vol2-Index ]

(including Village, Small, Cottage, Agro and Food Processing Industries)

5.111 The major new projects planned to be taken up in the Ninth Plan are installation of New Medium Structural Mill, Bloom Caster with ladle furnace, reconstruction of Blast Furnace No.3, etc. at Durgapur Steel Plant; augmentation of capacity, developmentof Rowghat Mines, installation of Universal Beam Mill, etc. at Bhilai Steel Plant; renovation of Cold Rolling Mill Phase-II, upgradation of pipe plant, etc. at Rourkela Steel Plant; doublestrand slab caster, process control, modernisation of HSMPhase-II, etc. at Bokaro Steel Plant.

5.112 The Vizag Steel Plant (VSP) of Rashtriya Ispat Nigam Limited (RINL) has been commissioned fully. It is, however, yet to stablise its production at the rated capacity. VSP is the only integrated steel plant in India to have hundred per cent continuous casting facilities and the entire production comprises long products. Technologically, it is also one of the most modern steel plants in the country.

5.113 The major projects to be taken up for implementation in the Ninth Plan are Coal Dust injection in Blast Furnace Nos. I and II, Combined Blowing of LD Converters and expansion of capacity from 3.00 MT to 4.05 MT liquid steel.

5.114 Some of the major developmental objectives for the iron and steel industry in the Ninth Plan and beyond would be: (a) production of 38 million tonnes of finished steel by 2001-02 and 58 million tonnes by 2002-07; (b) provision of iron and steel items of international quality and prices to domestic consumers; (c) adoption of ISO 9000 series certification and Total Quality Management (TQM) by steel plants; (d) achievement of export target of 6 million tonnes of finished steel in 2001-02; (e) promotion of growth of private investment including foreign direct investment in the iron and steel sector by maintaining dynamism in the policy framework.

Non-Ferrous Metals:

5.115 The liberalisation of the economy affected non-ferrous metals industry rather severely during the Eighth Plan period. There was a sharp decline in the London Metal Exchange (LME) prices of non-ferrous metals, particularly copper, lead and zinc and a fall in demand of these metals due to slow-down of the economy during the first two years of the Plan. A substantial reduction in import duties was effected under the new policy dispensation, which made imported non-ferrous metals, particulary copper, lead and zinc cheaper than indigenously produced metals. The domestic companies had to resort to cut-backs in production, particularly of lead and zinc by Hindustan Zinc Limited, a major producer of these metals in the public sector. In the case of aluminium, though LME prices remained depressed during the first two years of the Plan, it did not affect the indigenous aluminium industry since it had comparative advantage. The LME prices tarted picking up with the easing of recession in the western world economy during early 1994, resulting in improvement in the situation for the domestic producers.

5.116 The investments by the public sector enterprises of the Ministry of Mines were well below the approved Eighth Plan outlays. The main reason for this was the inability of the concerned PSEs to mobilise adequate extra budgetary resources, which in turn was due to competitive environment and fall in international prices of non-ferrous metals coupled with reductions in import duties. A welcome development in the new liberalised economic environment was the initiative taken by the private sector in investing in non-ferrous metals which were hitherto reserved for the public sector as a matter of policy, particularly copper and secondary zinc smelters. The metal-wise details are given below:-

Aluminium

5.117 An average annual compound growth rate of 8.5 per cent in aluminium consumption was envisaged during the Eighth Plan period. As against this, the consumption of the metal grew at 5 per cent. This was mainly due to factors such as slow-down of the economy during the first two years of the Plan, slow off-take of aluminium by the State Electricity Boards due to paucity of resources, lower investment in the aluminium consuming sectors because of liquidity crunch in the economy, etc.

5.118 The production target set for the terminal year of the Eighth Plan was also not realised, mainly due to anticipated addition to the capacity not coming through. A new smelter of 150,000 tpa capacity planned to be set up by the private sector Hindustan Aluminium Company in Andhra Pradesh was dropped on commercial considerations. The public sector National Aluminium Company did not complete its debottlenecking programme due to some technical reasons and the private sector Indian Aluminium Company was not able to bring into production its full rated capacity as envisaged. MALCO could not produce aluminium during 1992-93 to 1994-95 due to non-availability of power.

5.119 The demand for aluminium is anticipated to grow at an average annual compound growth rate of 8 per cent during the Ninth Plan period. The installed capacity of aluminium is expected to increase from the present level of 6,70,000 tpa to 7,14,000 tpa.

5.120 It is expected that the private sector Indian Aluminium Company's capacity of 117,000 tonnes will become operational with its Belgaum Smelter's full capacity of 65,000 tonnes per annum coming into production with assured power supply from its captive power plant which has been taken up for implementation. Besides, it is envisaged that the public sector National Aluminium Company will complete the expansion programme of its alumina refinery in the Ninth Plan and work on the expansion of its smelter will be initiated during the later years of the Ninth Plan. The additional capacity will become operational during the middle of the Tenth Plan. Besides, with the completion of debottlenecking programme, about 12,000 tpa capacity will be added to National Aluminium Company's existing capacity of 218,000 tpa. The Hindustan Aluminium Company is planning to set up a new aluminium smelter of 250,000 tpa capacity in Orissa in the Ninth Plan. A new Cold Rolling Mill of 40,000 tpa capacity has been approved to be set up at the Korba Smelter of BALCO in the Ninth Plan in order to improve the product-mix of the company.

5.121 It is expected that three large export-oriented alumina plants of one million tonnes capacity each will be set up in the private sector. The industry has achieved international competitiveness and will continue to maintain this position in the Ninth Plan. It is envisaged that the industry will also launch programmes to develop and promote use of aluminium in various sectors of the economy, particularly, in areas where it could replace wood, plastics, etc.

Copper

5.122 While the consumption of copper has been higher than anticipated during the Eighth Plan, the planned addition to the capacity has not been realised mainly because of change in the scope of the expansion programme of Khetri Copper Complex of Hindustan Copper Limited (HCL). The company has now planned to expand Khetri Smelter capacity from 31,000 tpa to 46,000 tpa as originally planned in the Eighth Plan.

5.123 With the opening up of the economy, there was a spurt in the private sector investment in copper. Birla Copper Ltd. took up for implementation one large smelter of 100,000 tonnes per annum capacity and one copper rod plant of 80,000 tpa capacity during the Eighth Plan period. M/s. Sterlite Industries Limited also took up for implementation a large smelter of 100,000 tpa capacity during the Plan period. While the smelter of Sterlite Industries Limited has come on stream, the plants of Birla Copper Ltd. are expected to come on stream during early 1998. A scrap- based smelter of 50,000 tpa capacity was taken up for implementation in the private sector by SWIL Ltd. This is also expected to come on stream during early 1998. Besides, M/s. METDIST Ltd. is contemplating to set up a large smelter of 150,000 tpa capacity in the private sector which is anticipated to come on stream during the Ninth Plan period. With this, and after the completion of expansion of the Khetri Smelter of the HCL, the total copper capacity at the end of the Ninth Plan is expected to reach 500,000 tpa from the present level of 47,500 tpa. The total investment in these smelters is placed at Rs.5,400 crore. Besides, HCL, the only copper producer in the public sector, will make investment in expanding its existing mines and opening up new mines. A thrust under R and D will be given in the Ninth Plan for developing bio-leaching technology for recovering copper from lean grade ores.

5.124 The copper demand is expected to grow at the rate of about 8 per cent per annum in the Ninth Plan. With this, by and large, there would be no demand-supply gap during the terminal year of the Ninth Plan.

Zinc

5.125 There was a marginal increase in the growth rate of consumption of primary zinc over that anticipated for the Eighth Plan. The capacity creation target was also achieved with Binani Zinc Ltd. (BZL), a private sector primary zinc producer, having completed expansion of its smelter in Alwaye (Kerala). Hindustan Zinc Limited (HZL), the major public sector primary zinc producer, deferred major investments planned to be taken up in the Eighth Plan on commercial considerations.

5.126 The demand for zinc is anticipated to grow at the rate of an average 6 per cent per annum during the Ninth Plan period. Both the primary zinc producers, namely, HZL and BZL are likely to expand their capacities by 20,000 and 30,000 tonnes respectively during the Ninth Plan period. With this and taking into account the availability from the secondry sources, there will be a gap in the demand-supply to the tune of about 50,000 tonnes during the year 2001-02, the terminal year of the Ninth Plan. However, this gap could increase to 70,000 tonnes if the production from secondary sources fails to materialise, consequent to the ban on international movement of hazardous waste and scrap, including zinc ash under Basal Convention. HZL is contemplating to set up a new smelter, work for which is expected to start during the Ninth Plan period. But, it will come on stream only in the early part of the Tenth Plan. HZL has entered into a joint venture with BHPM of Australia for exploration and development of zinc and lead resources in Rajasthan.

Lead

5.127 In the Eighth Plan, primary lead demand was projected to grow at 8 per cent compound per annum. The actual growth rate has been around 7.5 per cent. This was primarily because the actual consumption in the base year 1991-92 was higher than that assumed for working out the growth rate. The production target set for the terminal year of the Eighth Plan (1996-97) was not realised primarily because HZL had to resort to cut back in production on commercial considerations. It is attributed to the effect of liberalisation which made HZL non-competitive in lead production. The company has initiated measures to tackle this situation. The capacity creation also fell short of the target, though marginally, because of the delay in completing the expansion programme planned by the only lead producer in the private sector - Indian Lead Private Ltd.

5.128 The demand for lead is expected to grow at the compound rate of 7 per cent per annum during the Ninth Plan period. The private sector Indian Lead Ltd. is planning to expand its capacity from the present level of 25,000 tpa to 40,000 tpa in the Ninth Plan. No addition to the existing lead capacity of 65,000 tpa of HZL is anticipated in the Ninth Plan. HZL has, however, included in its Ninth Plan programmes, expansion of the existing Rampura-Agucha lead-zinc mine and concentrator to increase the supply of lead concentrates for captive use and taking up exploration projects for augmenting its lead resource position in which it is presently deficit. For expansion of the secondary lead production in the country, a major problem will be availability of scrap, primarily because of Basel Convention. The availability of domestic scrap will also be a constraint. Therefore, new scrap-based lead capacity in the secondary sector is not expected to come up in the Ninth Plan.

Capital Goods and Engineering Industry

5.129 The capital goods and engineering industry comprising mainly of Machine Tools, Electrical Machinery, Industrial Machinery, Transport and Agricultural Equipment, Oil Exploration, Mining, Earth Moving and Construction equipment and control and instrumentation has crucial backward and forward linkages with the rest of the industry sector. The trend and pattern of its growth determine the productivity and performance parameters of other industries. In the past, the Government had protected this sector through high customs duties on imports of plant and machinery which had at times impeded the efforts of other industries towards modernisation and technological upgradation. By mid 1970s, the share of indigenously produced capital equipment in the total supply of machinery reached a level of over 80 per cent.

5.130 The first attempt at rationalising Indian capital goods industry was made in 1975 by delicensing 24 industries including industrial machinery, machine tools and other equipment. Thereafter in 1985, 25 broad groups of industries including several items of industrial machinery were delicensed for non- MRTP, non-FERA companies. Machine tool industry became the first group of industries to be broad-banded in 1983. Industrial machinery sector was also broad-banded covering chemical, pharmaceutical, petrochemical and fertilizer machinery. In August, 1987 a Technology Upgradation Scheme was launched for five groups of capital goods industries. The scheme was to encourage selective import of foreign technology to upgrade the capital goods industry.

5.131 During the first two decades of planned development, the growth rate of the capital goods industry was impressive at 17.10 per cent for machinery and machine tools (except electrical machinery), 14.9 per cent for electrical machinery and 11.05 per cent for transport equipment. This was primarily because of investment made in setting up new capital goods capacities in the country and partly due to the base year production level being very low. During 1970s, the average annual compound growth rate of machinery and machine tools (other than electrical machinery) was moderate at 8.2 per cent whereas the electrical machinery group could achieve only5.4 per cent growth rate during this period. The performance of transport equipment sector was much lower at 2.8 per cent annual growth rate during 1970s. The main reason for the low growth rate in electrical machinery during 1970s was lower growth in electricity generation during the Fourth Plan period i.e 1969-74. In the case of transport equipment sector, the lower growth rate was primarily due to various controls on capacity expansion and new capacity creation in the automobile sector in order to restrict the demand for petroleum products. During 1980s, the growth rate in machinery and machine tools sector (except electrical machinery) was 6.5 per cent, whereas the electrical machinery group achieved a significantly higher growth rate of 18.9 per cent primarily due to large capacity expansion in power generation during the Fifth and Sixth Plan periods. The machinery and machine tools sector suffered due to lack of technology upgradation due to more emphasis on indigenisation.

5.132 After the major industrial reforms of 1991, the capital goods sector had negative growth during 1991-92 to 1993-94 due to balance of payment crisis which necessitated an import squeeze affecting availability of inputs and their costs, the tight monetary policy pursued by the Government to contain inflation, which affected the demand and raised the cost of borrowings for the industry, fall in demand due to reduction in public expenditure and investment as well as postponement of investment plans in the private sector in anticipation of further reductions in import duties and lack of international competitiveness of the domestic capital goods industry However, the industry quickly responded to these challenges and upgraded itself. The reforms started showing positive results since 1994-95 with growth rates of 24.8 per cent and 17.8 per cent during 1994-95 and 1995-96, respectively. Since 1995-96, however, there has been a slight down-slide as a result of the overall industrial growth slowing down primarily due to slow-down in electricity generation, crude oil production, high cost of borrowings, slump in the primary capital market and low investment in infrastructure. Recovery in the capital goods sector is linked with overall industrial revival. The demand for capital goods being a derived demand, the long-term prospects of the industry would depend on continuous and sustained growth in overall industrial production.

5.133 During the Ninth Plan, the capital goods industry is expected to grow at 12-14 per cent per annum. In order to sustain a growth rate of this level, the industry needs to orient itself in terms of quality and costs. Being a capital intensive sector, the domestic production is sometimes costlier than imports. The reasons for prevalence of high cost pattern of production in the capital goods industry are (i) higher prices of components and bought-out parts (due partly to lower scales of production), (ii) a lower ratio of sub contracting which usually allows producers to minimise costs over the entire production process, (iii) low utilisation of capacity, especially by international standards, (iv) small sizes of plants, (v) insufficient plant modernisation and inability to keep pace with the CNC techniques used elsewhere in the world, (vi) higher inventory costs - Indian machinery manufacturers keep 6-12 months' production as inventory because of uncertainties regarding inputs and sales, poor distribution network and infrastructure bottlenecks, (vii) an inverted duty structure with lower Custom duty on import of finished goods than duties on imported raw materials/components, which puts the domestic manufacturers at a disadvantage giving them negative protection against imports. Domestic manufacturers are at a further disadvantage due to local levies (sales tax, octroi etc.) vis-a-vis foreign manufacturers The anomalies in excise duty (ED) and counter vailing duty (CVD) also require rationalisation to bring domestic industry on par with foreign manufacturers. Due to these reasons and some other inherent disadvantages like cost of finance, infrastructure facilities, etc., `zero' customs duty on import of items which are also manufactured in India, domestic capital goods industry does not have level playing field vis-a-vis imports. This needs urgent attention.

5.134 Some of the thrust areas during the Ninth Plan are R and D and exports. Any R and D effort would have to be towards achieving improvements in the existing efficiency, security, safety and reliability of systems. If the industry is to develop and grow in a competitive market, it has to produce cheaper, better quality and better designed products, besides offering shorter delivery period and guaranteed service.

5.135 There is a growing need for ensuring quality in the products and services. With the emergence of the open market economy, quality management is an essential management ingredient to harness the potential capabilities in the organisation to meet customer requirements and even exceed them in order to have an edge over the competitors. An organised effort at institutionalising quality management and spreading it to all sectors of industry as a culture is increasingly being made.

5.136 To be competitive in the global market, production costs have to be optimised. The machining technology plays a vital role in the output, quality, productivity and competitiveness of the engineering industry. The future level of manufacturing industry in the country would depend to a large extent on its ability to update its technology in tune with the current international trends.

5.137 Small and medium sized engineering units are engaged in the manufacture of auto components, metal parts of electronic industries, machine tools, cutting tools, sheet metal products and fabrications, textile machineries, precision gauges and instruments, fabrication, heat treatment and surface treatment. The small and medium units need support in technology upgradation and productivity improvement through consultancy services and training. R and D support for product development and testing are the immediate requirements of the engineering industry.

5.138 ISO 9000 certification will be encouraged for increasing exports. The ISO 9000 movements have laid great emphasis on the reliability and precision of measuring instruments and equipment used in the laboratories which in turn contribute towards achieving a higher quality of the end-product. Consequently, the calibration of measuring instruments assumes greater importance since ISO 9000 series standards make it mandatory that instruments used should have a known state of calibration with precision of national or international standards.

5.139 The different rates of levies like sales tax, motor vehicles tax, road tax, etc., prevailing in different States for the automobile industry need to be rationalised. In the machine tools industry, the existing public sector units will be encouraged to form joint ventures with reputed manufacturers for technology upgradation. The PSUs engaged in the manufacture of industrial, electrical and other machinery also need to be privatised by forming joint ventures for technology upgradation and efficient management, wherever appropriate.

Ship Building and Ship Repair Industry

5.140 The shipping industry is closely connected with the ship building and ship repair industry for augmentation, service and maintenance. At present, there are 40 shipyards in the country, out of which seven are in the public sector (four under the Ministry of Surface Transport and three under the Ministry of Defence), two in the State sector and the remaining in the private sector. The ship building industry has been delicensed and is open to the private sector, irrespective of the size of ships, except for construction of war-ships. At present, the private shipyards are not building large-sized ships due to various reasons like non-availability of adequate resources, inadequate returns, lack of demand etc. The three public sector shipyards under the Ministry of Surface Transport are Cochin Shipyard Limited (CSL), Hindustan Shipyard Limited (HSL) and Hooghly Dock and Port Engineers Limited (HDPE). CSL and HSL are catering to ocean sector while HDPE is mainly confined to construction of fishing trawlers, barges, small passenger vessels, small crafts etc. CSL has been designed for building large size (86000 DWT) panamax type vessels and oil tankers while HSL builds standard (21,500 DWT) pioneer class type vessels.

5.141 The Indian shipyards have been finding it difficult to face competition from abroad, the main reasons being lack of design base, very high cost of production, unduly long delivery periods and poor viability of the shipyards. In the Eighth Plan, taking into account the problems faced by the ship-building industry, more emphasis was given to ship repair activity, which is more profitable and foreign exchange saving than ship-building. Ship repair industry has been recognised as a deemed export industry and a number of concessions which are given to 100 per cent export oriented units, are available to this industry. The capacity utilisation of the public sector shipyards in the ship-building activity was very low. The major reasons for the poor capacity utilisation are inadequate flow of orders, reluctance on the part of ship owners to place orders due to the higher price of indigenous ships and long construction period compared to international builders. The pricing policy for construction of ships in Indian shipyards was revised in September, 1993 for a period of two years which expired in September, 1995. Under this a subsidy of 20 per cent from the Central Government and 10 per cent from the owner of the ship was provided to the shipyards.

5.142 During the Eighth Plan, the production in HSL was 113,895 DWT and in CSL 69,033 DWT, registering a capacity utilisation of 30.27 per cent and 10.09 per cent respectively. However, as shiprepair is more remunerative, the ship building docks and other facilities have been used by these shipyards for ship repairs. During the Eighth Plan, CSL has achieved a turnover of Rs. 390.94 crore in ship repair activity and CSL could turn around and start earning profits. During Eighth Plan period the turn over of HSL was Rs. 198.21 crore. The HSL which is presently incurring losses, needs to concentrate more on ship repair activity. HDPE, which is presently a sick yard, is undergoing a short-term revival plan to complete the existing orders. A long-term revival plan including privatisation needs to be formulated and implemented.

5.143 Though in the existing scenario, ship repair is more profitable than ship building, the ship building industry needs to be maintained at least at the existing level of production because of the following reasons :

5.144 (i) Ship building is a skill which has been developed by shipyards at considerable cost and should not be allowed to die out, (ii) ship building industry is supported world over by their respective Governments; Indian shipbuilding industry also needs such support from the Government, considering strategic requirements and also the foreign exchange saving involved in it, (iii) the infrastructural facility such as design setup, huge fabrication and assembly shops, machines, hydraulic presses, etc. developed by shipyards will become redundant as these are not fully useful for ship repair activity, and, (iv) ship building industry also supports ancillary industries.

5.145 During the Ninth Plan, emphasis will continue to be on ship repair activity and the future of ship building will depend on the competitiveness of the Indian yards, which will have to improve their efficiency and modernise by forming joint ventures with reputed foreign shipyards. They may also diversify their activities so that the idle machinery etc. could be fully utilised. Another advantage of forming JVs is that the JV partner may be able to get international orders.

5.146 The National Ship Design and Research Centre (NSDRC), a society under the Ministry of Surface Transport was commissioned in 1993, to provide design/consultancy services to the ship building industry. The Centre is yet to sustain its activities. Considering the present situation of the Indian ship-building industry, NSDRC should extend its consultancy services beyond the country's borders so that it could sustain its operations rather than depending on budgetary support.

Electronics

5.147 The presence of electronics is being felt in every sphere of life. Electronics has been identified as an effective tool in tackling various issues of national importance like literacy, education, health, agriculture, information infrastructure, population control, unemployment etc. It is set to bring about a social transformation covering all spheres of life in manufacturing, services, education, management and entertainment. Its enviable role in key sectors of the national economy for improving efficiency, achieving cost optimisation and improving safety as well as reliability, has been amply demonstrated.

5.148 During the Eighth Plan, the electronics industry is estimated to have achieved a cumulative growth of 20 per cent in production and 41 per cent in exports. In the terminal year of the Eighth Plan, electronics production and exports were Rs.26,640 crore and Rs.6,287 crore, respectively, against the Eighth Plan target of Rs.36,000 crore and Rs.6,500 crore respectively. The infrastructure facilities created by Government of India like Software Technology Parks, Electronics Hardware Technology Parks, Export Processing Zones, Standardization Testing and Quality Control (STQC) Laboratories are contributing a lot to the growth of the electronics industry.

5.149 The Eighth Plan witnessed liberalization in fiscal, industrial and trade policies. Licensing has been abolished for the electronics industry as a whole except for aerospace and defence electronics items. The EXIM policy has been liberalised. With the exception of consumer electronics and telecommunication products, no other items figure in the negative list of imports. The consumer electronic items are allowed for import under Special Import Licence (SIL). The customs duty on specified raw materials was reduced to 10 per cent and on components, computer and computer peripherals to 20 per cent. These changes in import duties have imparted the much needed dynamism to the computer industry.

5.150 The Software Technology Park scheme, initiated for boosting software development and exports, has made good progress. Upto 1996-97, 642 units were accorded approval under this scheme compared to 121 units till January 1991.

5.151 During the Eighth Plan, there has been a significant growth in investments in computers, consumer electronics and telecommunication sectors. Several foreign collaborations have been established in the sector with prominent multinational companies setting up production/design base in the country for exploiting the advantages of cost-effective human capital and other inputs.

5.152 A target of electronics production of Rs.1,38,350 crore has been kept for the terminal year of the Ninth Plan, representing a compound growth rate of about 39 per cent per annum. This will be 2.0 per cent of world production, as compared to 0.7 per cent at present. An export target of Rs.49,000 crore has been set for the terminal year of the Ninth Plan with a growth rate of 51 per cent. In order to achieve these ambitious targets, the required strategies will be designed and these include: rationalising tariffs, attracting foreign investment, promoting production at international levels of costs and prices, market promotion and export thrust, raising the quality of products to international levels, rationalising of procedures, dentifying niche areas in world market, strengthening manpower base, improving R and D efforts, encouraging computing in Indian languages, application of electronics in different sectors of the economy and strengthening data base.

5.153 The development of information infrastructure in the country is increasingly becoming significant and promises to bring far reaching changes in the lives of the people. Some of theareas which have been well appreciated by the society are Railway Passenger Reservation System, Screen Trading of Scrips in stock exchanges, networks of educational/ research institutions, etc. The access to Internet has already been established in various parts of the country. During the Ninth Plan, a National Information Infrastructure (NII) is being initiated with a high speed national network and a regulatory authority. Apart from this, the NICNET, a satellite based information network of National Informatics Centre (NIC), which has already been extended to almost all districts in the country will continue to serve mainly the Government sector.

5.154 During the Ninth Plan, thrust will be given to joint R and D projects with user agencies. Special impetus will be given for technology development in selected areas leading to increased exports and for infrastructure development to help exporters.

5.155 The technology development perspective identified for the Ninth Plan period includes: enhancing the product range of audio and video products, incorporating emerging digital technology and home electronics products, industrial automation for increasing productivity and quality, widespread use of Internet, personal communication services and mobile satellite services, increasing computer communication speed, more computer penetration, strategic electronic components, high resolution technologies, future air navigation systems, radar technologies, components, micro-electronics, multi-layer surface mounted PCBs and colour display devices.

5.156 For global competitiveness, quality assurance to international standards is a pre-requisite. There is a need to expand the present services of STQC to cover areas like environmental/energy management systems, energy auditing, Information Technology (IT) and telecommunication sectors.

5.157 The strength of the country in the software area is well recognised. There is a need to develop globally competitive and high quality software to encash on its comparative advantages Software houses should concentrate on areas like packaged software, software for factory automation, networking, virtual reality-based design activities, telecom applications, etc. Information technology (IT) has been identified as an area of extreme focus in all future Plans. All efforts will be made to make India a global IT Power and one of the largest generators and exporters of software in the world within ten years. Action to achieve this ambitious national mission has been initiated under National Information Infrastructure (NII) programme. This includes a number of initiatives like setting up of National High-Speed Backbone NetWork, Internet and Related Matters, Promotion of STPI Infrastructure, E-Commerce, Cyber Laws, Human Resource Development in IT and Software, Financing Software Industry, Tax concessions for the IT sector, etc.

5.158 Availability of high quality trained manpower is a must in order to achieve the Ninth Plan targets especially in respect of software exports. To this end, emphasis will be laid during the Ninth Plan on introducing more job-oriented courses at all levels by encouraging private institutions to impart training in computer software area. The need of specialised manpower in areas like software engineering practices, system analysis and design capability and project management skills will be catered through specialised courses to be initiated in the IITs, IIMs, National Centre for Software Technology (NCST), Centre for Advanced Computing (C-DAC), etc. Special manpower development schemes in the area of Applications-Specific Integrated Circuit (ASIC) design, Hindi and regional languages as operating systems, schemes for SC/ST and backward regions in the North East will be initiated during the Ninth Plan. The connectivity of a number of educational institutions and R and D Centres and research institutions to national and international networks will be undertaken during the Plan period.

Fertilizers

5.159 The production targets of both nitrogenous and phosphatic fertilizers set for the Eighth Plan (1996-97) were not achieved primarily because the planned capacity addition of seven lakh tonnes in the case of nitrogen (N) and two lakh tonnes in the case of phosphate (P2O5) did not materialise.

5.160 In the case of nitrogenous fertilizers, the shortfall was partly due to non-availability of feedstock-natural gas - which was expected to be made available to units at Vijaipur, Aonla and Jagdishpur (on HBJ pipeline) and two other small units in Krishna Godavari (KG) basin for their expansion projects planned for the Eighth Plan. While Aonla and Vijaipur units got the gas, Jagdishpur could not get the gas allocation partly due to limitation in the availability of gas from the HBJ pipeline and partly due to shifting of priority for gas allocation to the power sector. The other two small units also did not get gas as anticipated because of low gas reserves in the KG basin. Gas shortage also restricted exploitation of the full capacity of gas-based plants. The other reasons were lower contribution of nitrogen from the phosphatic fertilizer units.

5.161 Due to nearly 100 per cent dependence on imported raw materials, only a small addition in the capacity of phosphatic fertilizers was planned in the Eighth Plan mainly through adoption of pipe-reactor technology in the existing units where 25 to 35 per cent extra capacity could be achieved at nominal investment. Even this addition in the phosphatic fertilizer capacity could not be realised due to changes in the pricing policy in August, 1992 when decontrol of phosphatic fertilizers (along with potassic) was announced. The demand for phosphatic fertilizer slumped and remained stagnant inspite of providing some ad-hoc subsidy. Domestic producers faced stiff competition from imports which flooded the market as a result of decontrol of phosphatic fertilizer industry.The domestic units were forced to cut back production.

5.162 The performance of the sick public sector units continued to be a cause for concern throughout the Eighth Plan period. The performance of Durgapur, Namrup and Barauni units of Hindustan Fertilizer Corporation (HFC) deteriorated in real terms though with derating of capacities of these units their losses came down. The Haldia project of HFC failed to achieve commercial production and its commissioning has been discontinued since 1986. The position of Fertilizer Corporation of India (FCI) is broadly similar with the Gorakhpur unit remaining closed since 1990 following an explosion. Ramagundam and Talcher working well below the rated capacity due to high ash content of coal and technological problems. Both HFC and FCI along with Projects and Development India Ltd (PDIL) a consultancy unit- have been referred to BIFR The revival package in the case of PDIL has been finalised and implemented. It did not envisage infusion of fresh funds. The turn around package of PDIL has been quite successful and the company has recorded substantial improvement in its operating and financial performance. The revival packages for HFC and FCI have been prepared and are under consideration of the Government.

5.163 The Pyrites, Phosphates and Chemicals Ltd. (PPCL) and Paradeep Phosphates Ltd. (PPL), which produce only phosphatic fertilizers, suffered due to shrinkage of demand for phosphatic fertilizers following decontrol in August, 1992. Though these units were able to avert cash losses, they continued to make operating losses and were provided budgetary support for meeting their investment needs. Both these PSUs have embarked upon turn- around strategies to improve their performance under a targetted time-frame.

5.164 The Eighth Plan had advocated the removal of subsidy in a phased manner on fertilizers and creation of free-market conditions in the fertilizer market. The decontrol of phosphatic and potassic fertilizers led to a steep increase in their prices with consequent decline in demand for these fertilizers. It also resulted in overdosing of comparatively cheaper nitrogen through urea, which was under price control. The NPK ratio of fertilizer feed, which was 5:2.5:1 in 1991-92 and was approaching the optimal level of 4:2:1, drifted away after decontrol to 8.4:2.5 :1 in 1996-97; it has gone as far as 37:8.5:1 in the northern zone. This has serious implications for long-term fertility of soil and needs urgent attention. A high power committee was set up to suggest suitable changes in the pricing policy of fertilisers. The committee has since submitted its report, which is under consideration of the Government.

5.165 Among the key objectives for the Ninth Plan would be long- term feed-stock policy for the fertilizer sector and an appropriate fertilizer pricing policy which while maintaining a balance between the twin objectives of tapering off the subsidy and encouraging fresh investment in the fertilizer sector, will help increase fertilizer consumption as well as correct the large disparity between the prices of different nutrients for achieving their optimum application ratio.

5.166 The other areas which would need attention include strengthening of infrastructure, especially for fertilizer movement (railways) and handling of imported fertilizers (ports) which are becoming bottlenecks in meeting the demand for nutrients in different parts of the country. This also implies that the location of new fertilizer plants would be encouraged in deficit areas in order to reduce the lead distance of transportation and avoid logistic problem.

5.167 The fertilizer industry should expand their soil testing services to advise the farmers on the balanced use of fertilizers. At the same time, there is a need to educate the farmers on Integrated Plant Nutrient System.

5.168 With appropriate price correction, the demand for phosphatic fertilizers during the Ninth Plan is anticipated to grow at 7 per cent per annum and for nitrogenous fertilisers at 5 per cent per annum. Based on these growth rates, the demand would be 13.4 million tonnes for nitrogenous fertilisers and 4.6 million tonnes for P₂ O₅ during the terminal year of the Ninth Plan i.e. 2001-02. With the projects under implementation and under formulation, the domestic production is anticipated to meet almost 98 per cent of the demand in the case of nitrogenous fertilizers, leaving a gap of 0.2 million tonnes. The gap in the case of P₂ O₅ would be 1.7 million tonnes. The total investment in the fertilizer sector in the Ninth Plan is estimated at around Rs.13,300 crore, out of which about Rs.9,300 crore would be in the public sector and the balance in the private sector.

Petrochemicals

5.169 Petrochemicals can be broadly categorised as polymers like polyethylenes commonly known as LDPE, LLDPE, HDPE, polypropylene (PP), polyvinyl chloride (PVC), elastomers like styrene butadiene rubber, poly butadiene rubber, fibres such as PFY, PSF, acrylic fibre and intermediates such as ethylene, propylene, benzene, caprolactam, dimethyl terephthalate (DMT), purified terephthalic acid (PTA), etc. Petrochemicals are manufactured from the feedstocks coming from the petroleum refineries-naphtha and cracked LPG-and natural gas.

5.170 The manufacture of petrochemicals involves three stages : (a) manufacture of olefins such as ethylene, propylene and butadiene from petroleum feedstocks, (b) manufacture of intermediates such as acrylonitrile, DMT, PTA, and (c) manufacture of final products such as polymers, elastomers and fibres.

5.171 The petrochemicals industry in India made a modest beginning in the 1960's with the commissioning of a small-sized integrated petrochemicals complex of 60,000 tpa capacity by National Organic Chemicals (India) Ltd. (NOCIL), followed by a small cracker and an LDPE plant by Union Carbide (India) Ltd. (UCIL), a PSF plant by Imperial Chemical Industries (ICI) and a synthetic rubber plant by M/s. Synthetics and Chemicals. All these plants were set up in the private sector. The industry, however, saw a phenomenal growth with the commissioning of Indian Petrochemicals Corporation Limited's (IPCL) - a public sector unit - cracker complex of 1,30,000 tpa capacity at Baroda in the late 1970's and several other plants in the private sector during the 1980's.

5.172 The petrochemicals industry has been one of the fastest growing sectors in the Indian economy. The 1980s witnessed a significant growth in the consumption of all petrochemicals with synthetic fibres and intermediates registering the highest growth rates of around 16 per cent followed by thermoplastics at around 12 per cent per annum. On the whole, the consumption of petrochemicals grew at an annual compound rate of 13.3 per cent in the 1980s. In quantitative terms, the consumption of petrochemicals grew from around 7.5 lakh tonnes in 1979-80 to well over 3.5 lakh tonnes in 1995-96. While the consumption has grown at a very healthy rate, capacity growth has lagged behind. Around the mother crackers, grew the down-stream units which manufacture a large variety of consumer products of plastics including synthetics and cotton blended cloth.

5.173 Keeping in view the higher growth rates realised during the 1980s and the increase in demand for petrochemicals, letters of intent/industrial licences were issued for the setting up of crackers at Hazira in Gujarat, Auraiya in UP, Gandhar in Gujarat, Vizag in AP, Haldia in West Bengal, Tengaghat in Assam, Payal near Ludhiana in Punjab, Mangalore in Karnataka, Jamnagar in Gujarat and expansion of National Organic Chemicals Industries Ltd. cracker at Thane-Belapur in Maharashtra. The total investment in these crackers is estimated at around Rs.40,000 crore. Besides, letters of intent/industrial licences were issued for a number of aromatic complexes. Out of these, Hazira, Auraiya and Gandhar Phase-I have been completed, whereas the progress made in the implementation of the other crackers as well as aromatic complexes has been rather slow.

5.174 The petrochemicals industry was not internationally competitive in the earlier closed economy due to factors such as high input costs, high rates of taxes and duties, infrastructural bottlenecks, etc. With the opening up of the economy, the industry was delicensed except for hazardous products like ethylene, propylene, butadiene, xylenes, toluene, polycarbonate, mono ethylene glycol, etc. The import duties were progressively reduced.

5.175 The Eighth Plan was formulated in the background of economic reforms which implied much greater freedom to Indian industries to make their own business decisions in the competitive economic environment. During the first three years of the Plan, petrochemicals industry came under severe competition with comparatively cheaper imports. This was compounded by a slow-down of the economy during the first two years of the Plan. The international prices of most of the petrochemical products remained depressed during most of the Eighth Plan period. This resulted in cheaper imports and posed a serious threat to the domestic petrochemicals industry.

5.176 The domestic producers had to resort to cut-backs in production, particularly of intermediates. The profitability was also affected. The industry responded to the new economic environment with restructuring, adoption of the latest technologies and taking other measures to improve its competitiveness. Most of the players in the industry have been able to adjust to the new economic environment. The adoption of the latest technologies by the industry has been through a combination of absorption of imported technologies, in-house efforts, R and D and through industry-institutional R and D linkages.

5.177 While the major players in the public sector, namely, Indian Petrochemicals Corporation Ltd. and Hindustan Organic Chemicals Ltd. have taken up expansion/ diversification schemes, the Petrofils Cooperative Ltd. has turned sick due to factors such as surplus capacity, cheaper imports, lower demand, steep price hike of raw materials and intermediate inputs, severe liquidity crunch, working capital shortage, etc. It has not been possible to work out any viable revival package so far.

5.178 About 88% of the indicative production targets of the major petrochemicals, excluding fibre intermediates set for the terminal year of the Eighth Plan - 1996-97 has been realised. Production of polymers and synthetic detergent (LAB) exceeded the indicative targets by 4% and 11% respectively and synthetic fibres, fibre intermediates and synthetic rubbers also achieved about 70%, 81% and 69% of their respective indicative targets. Among synthetic fibres, 82% of the indicative target was realised in respect of acrylic fibre and 100% in the case of nylon industrial yarn. The achievement was about 106% in respect of DMT/PTA, which serve as the main raw materials for the production of Polyster Filament Yarn (PFY) and Polyster Staple Fibre (PSF). With the installation of 7.5 million tonne per annum mega cracker at Hazira, the country has almost reached the stage of self- sufficiency in petrochemical building blocks. The new capacity additions in polymers, such as PVC at Gandhar Cracker of IPCL and Hazira Cracker of Reliance Industries Ltd. (RIL), Polypropylene at Baroda Complex of IPCL and Hazira Complex of RIL and synthetic rubber (SBR) at Baroda Complex of IPCL, have bridged the gap between domestic production and consumption. India has become net exporter of PFY, PSF, PVC, PS and LAB. Following import liberalisation, competition is, however, regulating the market and hence prices determine the buyers' choice to go either for indigenously produced products or the imported ones. About 25% of the total domestic production of petrochemicals is envisaged to be exported during the Ninth Plan period.

5.179 The tempo of investment in the petrochemicals sector slowed down in the Eighth Plan. This is attributed to many factors, important ones being the cautious approach adopted by the industry because of liberalisation which, interalia, resulted in cheaper imports coming into the country due to depressed international prices during most of the Eighth Plan period, liquidity crunch faced by the industry including non-availability of funds from public financial institutions to petrochemicals industry as a matter of Government policy. The position, however, improved from the third quarter of 1995-96 when international prices of some of the petrochemical products started rising. This improved profitability of both the public and private sector companies. The IPCL, commissioned Phase-I of Gandhar petrochemical complex with coming on stream of Vinyl Chloride Monomer (based on imported ethylene) and caustic soda/chlorine units, etc.The Phase-II comprising Mother Cracker and down stream units is expected to be commissioned by December, 1998. The IPCL completed revamping and expansion programme of Poly Butadiene, PP and Butadiene units located at its Vadodra cracker complex. It also completed expansion programme of Ethylene and HDPE units located at its Maharashtra Gas Cracker Complex, Nagothane.

5.180 In order to provide technical services to the growing plastics processing industry including trained personnel, testing for standardisation and quality control of the products, etc., Central Institute of Plastics Engineering and Technology (CIPET) was established at Madras in 1968. Many Centres have also been set up in different parts of the country. The Extension Centres at Amritsar in Punjab, Mysore in Karnataka, Imphal in Manipur and Calcutta in West Bengal were set up during the Eighth Plan period. Six new Centres at Narora (UP), Pune (Maharashtra), Jaipur (Rajasthan), in Kerala, Guwahati (Assam), in J and K and Himachal Pradesh are expected to be set up during the Ninth Plan. CIPET has joined hands with BPTA (British Polymer Training Association) to conduct BPTA-type training programme in India.

5.181 The petrochemicals industry has a major role to play in the Ninth Plan in achieving, interalia, the objectives such as employment generation, regional development, improvement in the quality of life of the citizens, etc. The emphasis in the Ninth Plan would be on achieving international competitiveness through restructuring, technological upgradation, expansion of capacities, innovative managerial and marketing efforts and R and D, including effective and efficient industry-institutional R and D linkages. The private sector is expected to play a major role in further development of the petrochemicals industry and a number of joint ventures abroad are expected to come up during the Ninth Plan period.

5.182 It is anticipated that the petrochemicals industry will achieve an annual compound growth rate of around 15 per cent- synthetic fibres, 12 per cent electronics and polymer sectors at about 16 per cent in the Ninth Plan. The total investment in the petrochemicals industry in the Ninth Plan is placed at around Rs.72,000 crore, out of which the public sector is anticipated to contribute around Rs.6,000 crore. The investment is expected to get a boost, since restrictions imposed earlier on the public financial institutions for funding petrochemicals industry have been removed.

5.183 The industry would need to pay due attention to environmental issues like handling plastic wastes. It is expected to make investments for installing state-of-the-art technologies with adequate pollution abatement facilities. During the Ninth Plan, greater emphasis would be laid on performance plastics such as polyamides, polyacetals, polycarbonates, etc., the consumption of which is linked to the growth of sectors like automobiles, electronics, telephones, agriculture, packaging, etc. The changing Indian scene with rapid growth of these industries will push up the growth in the consumption of performance plastics. The petrochemicals industry being technology-intensive, linkages between research, manufacturing, design, engineering and academia will need to be strengthened.

Drugs and Pharmaceuticals

5.184 The Indian drugs and pharmaceuticals industry is one of the largest and most advanced among the developing countries. It is manufacturing a wide range of basic drugs and pharmaceuticals, covering several therapeutic regimes including antibiotics, anti- bacterials, steroids, harmones, vaccines, herbal preparations, etc.

5.185 The domestic drug industry is in a position to meet about 70 per cent of the country's requirements of bulk drugs and almost the entire demand for formulations. The setting up of the Penicillin factory at Pimpri, Pune in the early 50's and the construction of Indian Drugs and Pharmaceuticals Ltd. (IDPL) plants at Rishikesh and Hyderabad in the 60's have been milestones in the history of the pharmaceutical industry in the country. These have been the building blocks on which the structure of the pharmaceutical industry in India has been built. The public sector investment in the pharmaceutical industry has been the engine of growth for the industry as a whole in the last three decades.

5.186 There were about 14,000 units producing drugs and formulations at the beginning of the Eighth Plan. This number has increased substantially since then. More than 30 per cent of production of bulk drugs comes from the small scale units. The production of bulk drugs and formulations has increased from Rs.240 crore and Rs.1200 crore respectively in 1980-81 to Rs.2186 crore and Rs.10,494 crore respectively in 1996-97. Exports of drugs and pharmaceuticals increased from Rs.161.32 crore in 1983-84 to Rs.2681 crore in 1996-97. Imports increased from Rs.163.34 crore in 1983-84 to Rs. 2096 crore in 1996-97.

5.187 The five public sector units namely, Indian Drugs and Pharmaceuticals Ltd. (IDPL), Hindustan Antibiotics Ltd. (HAL), Bengal Chemicals and Pharmaceuticals Ltd. (BCPL), Smith Stanistreet Pharmaceuticals Ltd. (SSPL) and Bengal Immunity Ltd. (BIL) have all been in the red due to outmoded technology, excessive workforce, high overheads, weak marketing set-ups, excessive reliance on institutional sales, etc. All these units were referred to BIFR and the revival packages approved by the Government for BCPL, BIL and SSPL are under implementation. These companies are expected to turn around during the Ninth Plan.IDPL could not achieve the target set forth in the revival package and BIFR has declared that the revival package has failed. An attempt is being made to put together a fresh revival package. The Industrial Development Bank of India, the operating agency appointed by BIFR, is also in the process of finalising a revival package for HAL.

5.188 A new Drug Policy was announced in 1994. Under this Policy, industrial licensing has been done away with. A new Drug Price Control Order was announced in 1995 reducing the number of drugs under price control to 76 from the earlier 142. With these liberalisation measures, the drugs and pharmaceuticals industry has registered a higher growth and the country has emerged as a net exporter of drugs during the Eighth Plan period.

5.189 Though R and D in the drug industry recorded a significant progress during the Eighth Plan period, the investment on drugs R and D in India is only 1 to 1.5 per cent of its sales turnover, compared to 12-15 per cent in the developed countries. So far, the main thrust has been on process improvements and not enough efforts have been made to discover new drug molecules from the basic stage.

5.190 The National Institute of Pharmaceutical Education and Research (NIPER) is being set up at Mohali near Chandigarh. This institute has been declared as a centre of excellence and is expected to fill up a major gap in the area of pharmaceutical education, research and training.

5.191 A new programme for promoting R and D in drugs and pharmaceuticals sector was initiated for which an outlay of Rs.10 crore was provided in the Eighth Plan. A two-tier structure was set up to manage the programme viz. an Apex Executive Committee at the Secretaries level, chaired by Secretary, Department of Science and Technology and an Expert Committee at the operational level.

5.192 The National Pharmaceutical Pricing Authority has been set up which has been entrusted with the task of price fixation/revision and other related matters. Besides, a separate Department of Indian System of Medicines and Homeopathy has been set up and the National Drug Authority is being set up through an Act of Parliament.

5.193 The domestic drugs and pharmaceutical market is anticipated to grow at an average annual rate of 15 per cent and imports at 12 per cent during the Ninth Plan period. The exports are expected to grow at an average annual rate of 10 per cent for formulation and at 20 per cent for bulk drugs.

5.194 The area of off-patent drugs would be of greater importance because of the post-GATT scenario during the Ninth Plan period. The export growth potential of drugs and pharmaceutical products would be tapped by wide expansion of export operations to Africa, Latin America, Middle East, South East Asian countries, etc.

5.195 The thrust of the drugs R and D in the Ninth Plan will be on developing new drug molecules through basic and applied research for which industry-institutional linkage would be strengthened, apart from pursuing the objective of effective and efficient computer-aided discoveries, setting up of specialised laboratories and adoption of good manufacturing and clinical practices. Realising that India has considerable potential for R and D in the area of tropical diseases, the R and D efforts in this direction would be encouraged.

5.196 An investment of the order of Rs.1400 crore is anticipated to be made in the drugs R and D during the Ninth Plan period. This is to be financed mostly by the drugs and pharmaceutical industry units from their internal resources and partly by the Central and State Governments and contribution from the financial institutions.

5.197 A number of R and D programmes have been identified for being taken up in a coordinated manner in the national laboratories, public sector undertakings and private sector units. Development of sophisticated formulations such as slow release forms, advanced drug delivery systems, etc., will receive due attention. Research and development in the area of Biotechnology by an understanding of DNA replication mechanism related to the country's needs will also receive due emphasis.

5.198 Pollution control measures, industrial safety and energy conservation will be considered as integral parts of production activities of pharmaceutical industry.

Chemicals and Pesticides Industry

5.199 The chemical industry plays a very vital role in the Indian economy providing basic inputs to pharmaceuticals, petrochemicals, fertilisers and a large number of other allied chemical and consumer industries.

5.200 The chemical industry has been one of the fastest growing sectors in the Indian economy. India was not in a position to export chemicals till the end of the Seventh Plan in large quantities because of high cost of production of chemicals as compared to international prices. During the Eighth Plan period, due to upgradation and modernisation of plants and the support provided by the Government for exports, the Indian chemical industry has shown an impressive performance in the field of exports.

5.201 Dyes and dyestuffs sector is one of the important segments of the chemical industry providing inputs to many consuming industries. It is capable of meeting most of the domestic demands. The industry is practically self-sufficient in terms of its inputs. There are around 50 units in the organised sector having a total annual installed capacity of 49,000 tonnes. The production achieved during 1996-97 was around 30,160 tonnes. A large quantity of dyes and dye-intermediates is being exported. The dyes and dyestuffs industry is also getting gradually integrated with the world economy and is phasing out environmentally unfriendly dyes and dyestuffs, including through banning their use. In this direction, a decision has been taken for banning the use of azo dyes in the textile industry.

5.202 Pesticides including insecticides, fungicides, weedicides, etc., are the other important segments of the chemical industry. These are used extensively in agriculture and public health. Like the other segments of the chemical industry, including basic chemicals, the pesticide industry has also grown rapidly during the past forty years. Presently, more than 60 technical grade pesticides are being manufactured in India. More than 125 units are engaged in the manufacture of technical grade pesticides and over 500 units are making pesticide formulations.

5.203 Production of technical grade pesticides during 1996-97 was around 98,000 tonnes from an annual installed capacity of 139,300 tonnes. As a result of the increased production of pesticides in India, import of technical grade pesticides has declined considerably. Of late, the country has also entered the competitive field of export of pesticides. During 1996-97, pesticides valued at Rs.851 crore were exported.

5.204 Though India has started producing new pesticides, the manufacturers are continuing to import their intermediates in the absence of technology for producing them. Efforts are being made to acquire technology to manufacture intermediates for a number of low-volume and high-cost new generation pesticides such as Butachlor, Endosulphan Synthetic Pyrethroids, etc.

5.205 The Eighth Plan saw greater awareness of environmental pollution and safety aspects and the new pesticides have to satisfy these criteria before being certified for use. The use of DDT and BHC, which are high volume pesticides, has been banned in agriculture.

5.206 The alcohol and molasses industry forms another important segment of the chemical industry and has made quite an impressive progress during the past forty years. The Molasses Control Order, 1961 and Ethyl Alcohol (Price Control) Order, 1971 - under which the prices and distribution of molasses and alcohol were regulated - were rescinded in 1993 with a view to ensuring free availability of these products on competitive prices to the down- stream industries. Some States are, however, continuing with controls on molasses and alcohol. The matter needs to be reviewed in the larger interest of the chemical industry.

5.207 Several pesticides, which have been banned in the developed countries, are still being used in India. These need to be reviewed. Viable and effective alternatives to toxic pesticides, integrated pest management emphasising on the use of environment- friendly pesticides and use of control agents such as parasites and predators of crop pests would be the policy direction in the Ninth Plan.

5.208 There are a number of international treaties in the chemical sector which are becoming increasingly important and would have large-scale implications for the Indian chemical industry. Some of the international treaties in this regard are the Chemical Weapons Convention, Basel Convention, Montreal Protocol, London Guidelines, etc. The domestic chemical industry is not fully aware of these treaties and their implications. It should be made aware of these by arranging visits of delegations to various countries, seminars, symposia and technology collaborations during the Ninth Plan.

5.209 India has ratified the Chemical Weapons Convention which has come into force on 29th April, 1997. As far as India is concerned, the main obligations of the Convention would relate mainly to the Indian chemical industry and, therefore, the Government will play a crucial role in the implementation of the Convention to ensure that the growth of the industry is not adversely affected while fulfilling the obligations under the Convention. The Convention requires extensive declarations from the chemical industry which would also be subjected to routine on-site inspections of declared plant sites and short-notice challenge inspections. For sensitisation of the industry to meet various obligations under the Convention, there will be constant interaction with the industry by way of meetings, seminars, workshops, discussions, trial inspections, etc. Analytical back- up support will be developed in the Ninth Plan for this purpose.

Cement

5.210 The cement industry was under price and distribution controls for about four decades. Both price and distribution controls on cement were lifted in 1989. It was delicensed in 1991.

5.211 The cement industry has recorded a significant growth in the past one and a half decade. The installed cement capacity exceeded the Eighth Plan target of 97 million tonnes in 1995-96 itself and touched a figure of 105 million tonnes during 1996-97. The total capacity addition during the Eighth Plan period was about 30-35 million tonnes, representing a growth rate of around 8.5 per cent per annum.

5.212 Though there was shortfall in cement production during the first two years of the Eighth Plan primarily due to infrastructure problems and depressed market conditions, the target of 76 million tonnes set for the terminal year of the Eighth Plan (1996-97) has been achieved. The Eighth Plan average annual growth rate of 7.2 per cent has also been achieved.

5.213 The private sector is having a significant presence in the cement industry with over 85 per cent of the production capacity. The public sector accounts for only around 15 per cent of the production capacity. The Central public sector undertaking, the Cement Corporation of India (CCI), is contributing to less than 5 per cent of the country's cement production.

5.214 The major areas of concern for the growth of the cement industry continue to be shortage of power and good quality coal and limitations in railway capacity. The cement industry is setting up captive power plants to overcome power problems.

5.215 The majority of cement units based on uneconomic wet process have been converted into modern dry process. Large-scale modernisation and automation have led to lower energy consumption and improvement in quality. A large number of plants of one million tonnes and above capacity have been set up with state-of- the-art dry process pre-calcinator technology, as a result of which the quality of cement produced in the country is comparable to the best in the world.

5.216 With the increase in the volume of production, bulk handling and distribution of cement have gained importance. Looking at the country's ever increasing demand for infrastructure facilities as well as for large-scale export requirements, the Government of India is setting up a pilot plant project for creating bulk cement movement facilities at Kalamobli, New Bombay.

5.217 On the export front, the cement industry has made spectacular progress. Indian cement manufacturers have become internationally competitive and export cement to the neighbouring countries like Bangladesh, Sri Lanka, Nepal, Maldives, Middle East, etc. However, the export target of 5 million tonnes set for the terminal year of the Eighth Plan (1996-97) was not achieved due to transport bottlenecks, particularly inadequate port facilities, high sea freight, duties and levies and due to growing domestic demand. Since the situation is not likely to improve in the near future, a conservative export target of 8.0 million tonnes has been fixed for the terminal year of the Ninth Plan, 2001-2002.

5.218 The performance of CCI has been unsatisfactory during the entire period of the Eighth Plan. Production suffered badly due to power shortage, working capital shortage, etc. For the Eighth Plan of CCI an outlay of Rs. 300 crore was approved.This was to be funded entirely from internal and extra budgetary resources. However, due to continuing losses, the company could neither generate internal resources nor mobilise extra-budgetary resources for financing its Eighth Plan schemes. In order to maximise benefits from its existing capacity, budgetary support of Rs.25 crore in 1994-95 and Rs.13.65 crore in 1996-97 was provided by the Government. The company has become sick and has been referred to BIFR. The turn-around strategy being considered involves privatisation of some of its units, financial restructuring, etc.

5.219 The demand for cement is anticipated to reach 109 million tonnes during the terminal year of the Ninth Plan (2001-2002) based on 8.5 per cent annual average growth rate. The capacity and production targets for the year 2001-2002 are placed at 135 million tonnes and 113 million tonnes respectively.

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