Finance Minister
Nirmala Sitharaman has urged plastic manufacturers to learn from the pharmaceutical and automobile industry’s experiences in ensuring ready availability of raw materials to support India’s attempts at boosting production of microprocessors and semiconductors.
Emphasizing the need to ensure “backward and forward linkages”, the Finance Minister warned the industry about making the mistake of relying on raw material imports.
“We have come to witness a great deal of discourse and activity of late in fab production and chip production, we are seeing new investments come into this space,” Sitharaman said while addressing a stakeholders’ outreach programme in Tamil Nadu,
“However, we need to ask ourselves the question — are we prepared with the critical raw material to bring in such business? Fab manufacturers are setting up shop, but do we have the raw material to support them? Or will we end up relying on raw material imports?,” she added.
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Citing the historic example of Indian pharma, Sitharaman called on manufacturers to learn from mistakes committed in letting overseas suppliers enjoy monopoly and thus play the deciding role in fixing raw material prices. Without naming China, the FM emphasized on how Chinese API-manufacturers have begun indirectly deciding cost of pharmaceutical production, in India.
“Take the example of the pharmaceutical industry — whatever drug you need to manufacture needs to have active pharmaceutical ingredients or APIs,” she said, adding, “While our country used to produce the maximum number of APIs, there was another country that came along and began manufacturing cheaper APIs and began enjoying an advantage over us.”
She said that today we depend on APIs from just one country that now has the option of whether it would like to increase prices or not. "So, a country like ours that led the world when it came to manufacturing pharmaceutical products has its cost of production dependent on what we pay for APIs from another country,” she added.
Sitharaman said she was citing the example of the pharmaceutical industry in order to remind the Indian industry that overseas investments alone would not count for much if there is no raw material integration in local supply chains. “We need to check whether our forward and backward integration is in place or whether we will be reduced to importing our raw materials from other countries.”
She added that both, the Union and various state governments were going the distance in ensuring there were no glitches in the value and supply chain of local industry, lest it go the way of the automobile industry. “Microprocessors and chips should have been here by now to meet supply chain obligations,” Sitharaman said, adding, “But the country that supplies us with these components still has lockdowns. This means we have no microprocessors even though we have ready inventory and demand, as a result of which business is suffering.”
