NITI Aayog Pushes Faster Clearances for Chemical Sector

Industry Insights from Next Move Strategy Consulting

In a significant push to bolster India's chemical manufacturing landscape, NITI Aayog has unveiled bold reforms aimed at slashing environmental clearance timelines from an average of 451 days to just six months. This initiative, designed to address chronic bureaucratic delays, seeks to enhance efficiency, attract foreign investment, and strengthen India’s position in global value chains.

Tackling Bureaucratic Bottlenecks 

The chemical sector, a cornerstone of India’s industrial growth, has long been hampered by protracted approval processes. According to NITI Aayog’s recent report, Chemical Industry: Powering India’s Participation in Global Value Chains, launched in Delhi by CEO BVR Subrahmanyam and Vice Chairman Suman Bery, 90% of chemical projects face delays, with clearances taking 196 days longer than the mandated 255-day timeline.

“These delays significantly inflate project costs and disrupt industrial development,” the report notes, highlighting that India’s approval process lags behind global benchmarks, such as the United States’ one-year timeline or the European Union’s 12-18 months for major projects. Key bottlenecks include lengthy public consultations, inconsistent documentation, and limited regulatory resources.

Strategic Reforms for a Competitive Edge 

NITI Aayog’s recommendations outline a transformative approach to streamline approvals while maintaining environmental safeguards. The proposed measures include:

• Dedicated Oversight Committee: By 2026, a panel under the Ministry of Commerce and Industry will monitor progress, aiming to reduce delays to under 10% of projects, with quarterly progress reports.

• Autonomous Expert Appraisal: Granting the Expert Appraisal Committee authority to make final decisions, eliminating redundant validation by the Environmental Impact Assessment Authority, potentially saving 45 days.

• Provisional Approvals: Allowing companies to undertake preliminary construction for low-impact expansions at their own risk while awaiting final clearance.

• Chemical Park Pre-Clearances: Enabling designated chemical parks to issue pre-approvals to streamline operations.

• Exemptions for Low-Impact Changes: Waiving fresh clearances for product mix adjustments that do not increase pollution loads.

These reforms target inefficiencies in the current multi-stage process, which includes application submission, screening, public consultation, environmental impact assessment scrutiny, expert appraisal, and final authority decisions. Delays are most pronounced during screening, expert appraisal, and final decision phases.

A Framework for Growth and Adaptability 

The proposed changes introduce a scalable and adaptable framework, enabling companies to initiate non-contentious activities, such as civil construction for capacity expansions, during the approval process. By addressing systemic inefficiencies, the reforms aim to reduce operational uncertainties and enhance resource allocation for chemical manufacturers, fostering a more dynamic industrial ecosystem.

Market Implications and Strategic Outlook 

NITI Aayog’s initiative is poised to reshape the chemical sector by enhancing its appeal to global investors and manufacturers navigating competitive supply chains. These reforms are set to accelerate project timelines, reduce costs, and elevate India’s ease-of-doing-business ranking, aligning with the growing global demand for chemical products. The streamlined process is expected to attract increased foreign direct investment, strengthen domestic production, and position India as a key player in global value chains.

Paving the Way for a Resilient Chemical Industry 

As India strives to bolster its industrial capabilities, NITI Aayog’s proposed reforms mark a critical step toward a more efficient and competitive chemical sector. By balancing regulatory rigor with operational agility, these measures promise to empower businesses, drive economic growth, and reinforce India’s role in the global marketplace.

Source: Hindustan Times

Prepared by: Next Move Strategy Consulting