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      Central govt clears SEZ for pharma industry

      Posted AtBusiness-Standard.com

      The central government has approved a special economic zone for the pharmaceutical industry which would be set up in Gujarat.

      The proposal has been cleared by the central government however notification has not been issued as it is awaiting formal clerance from the union ministry of home affairs, said Narendra Modi, chief minister, Gujarat.

      Modi who was addressing a a day long conference organised by the Gujarat Chemicals Association, said the pharma SEZ would lure others operating outside to the state.

      Modi refering to recent development of pharmaceutical companies shifting their new proposed projects to Uttaranchal state said "Pharma SEZ would put an end to flight of the industry major to Uttaranchal state."

      For Gujarat, which manufactures nearly 40 percent of the total drugs manufactured in the country and contributes as high as nearly 50 percent to the total pharma exports from the country, the move means a lot.

      According to Deepak C Mehta, managing director, Deepak Nitrite Limited said that the states like Andhra Pradesh where pharma companies have significant presence are looking for ways make fresh investments elsewhere as land locked places like Andhra Pradesh does not offer much opportunities for further investment.

      Addressing chemical industry experts Mehta emphasised the requirement of more investment in R&D and urged the state government to create a sort of an endowment through its public sector companies like Gujarat Alkalies and Chemicals, GNFC and GSFC for R&D.

      Talking about petrochemical business, Essar group chairman, Shashi Ruia in his address at the conference said that at present, the demand for polyethylene in India is expected to grow at 5 per cent annually, polypropelyene at 6 per cent and PVC at 14 per cent.

      In spite of this strong growth in the expected demand, India still meets 70 per cent of crude oil demand by direct imports.

      Needless to say, this calls for enhanced exploration and development activity on this front to ensure greater self reliance for our feed stock.

      I am happy to note that the recent oil and gas finds in the country will go some way in addressing this concern.

      The time is most ripe for significant leaps in manufacturing capacities, as this will have two benefits.

      This will give us a hedge against the cyclicality that this industry is subject to and it will help us take advantage of the rising demand for consumer products in India and neighbouring regions.

      When we set up petrochemicals complexes, we need to bear in mind that fully integrated complexes have a much greater role in adding value in the manufacturing process and also increasing competitiveness of the products from the complex.

      January 10, 2006


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