UP frames oxygen policy to attract investment

Virendra Singh Rawat

Lucknow / May 19, 2021

In the backdrop of rising demand for liquid medical oxygen (LMO) for the treatment of Covid-19 patients, the Uttar Pradesh government has announced a dedicated policy to attract private investment in the now critical segment.

The UP Oxygen Production Promotion Policy 2021 is aimed at encouraging the private sector for the manufacture of medical and industrial oxygen apart from creating fresh job opportunities by offering differential capital subsidy and stamp duty exemption depending upon the regions.

The state cabinet meeting virtually chaired by chief minister Yogi Adityanath recently approved the new policy, which has been drafted by the UP infrastructure and industrial development department.

Under the policy, the private investors will be eligible to avail of capital subsidy in three equal annual installments of 25 per cent for Bundelkhand and Purvanchal, 20 per cent for Mandhyanchal and 15 per cent for Pashchimanchal regions.

Besides, there will be 100 per cent stamp duty waiver for Bundelkhand and Purvanchal, 75 per cent for Madhyanchal and 50 per cent for Pashimanchal regions.

Although the supply of LMO in UP has breached the record levels of 1,000 tonnes per day, yet the state government has taken the policy decision to facilitate the setting up of O2 plants in the public and private sectors on a permanent basis to overcome contingent situations in future.

The early warning of a possible third wave of the Covid-19 pandemic has also made the Adityanath government to take preemptive measures for attaining self sufficiency in critical medical supplies.

The new policy will provide an enabling ecosystem to the private sector to foray into the entire oxygen/medical oxygen value chain comprising oxygen, oxygen cylinders, oxygen concentrators, cryogenic tankers, containers etc.

Earlier, the state government had even asked the state manufacturing industry to divert oxygen consumption from their industrial process for the medical use.

At present, the daily requirement of medical oxygen by the Covid hospitals and home isolation patients in the state is pegged at almost 1,200 tonnes. However, the daily liquid O2 production capacity in UP is merely 340 tonnes, including generation by oxygen separators. The remaining portion of the supply in the state is being sourced from the Centre and peer states.

Meanwhile, the UP cabinet also gave its nod to the UP Covid Emergency Financing Scheme to provide sops to existing industries producing notified medical items viz. oxygen, medical oxygen, hospital beds, ventilators etc.

The eligible units will be provided financial assistance from a special corpus. The policy will be valid for one year from the date of notification.

Currently, 300 oxygen plants are in the process of being set up in UP. The state is also encouraging the private sector to set up oxygen plants under the corporate social responsibility (CSR) route.