The Department of Chemicals and Petrochemicals had mooted the setting up of the committee which was proposed to comprise of representatives from the Ministry of Environment, Department of Chemicals and Petrochemicals and representatives from the chemical industry.

"The government's delay in constituting the committee will not only make it difficult for companies to initiate their expansion plans but would also jeopardise new investments coming in the sector," said highly-placed sources in the industry.

Even as sources in the industry said that there was no formal timeframe announced for setting up of the committee, they point out that the expectation was that the committee would be formed within a week's time since the government's meeting with the industry on thisissue.

But with more than a month having already passed and the government not being able to decide on the constitution of the committee, industry sources point out, that the new expansion plans and investments in the sector are poised to suffer.

The move to float separate chemical industrial estates comes in the wake of emerging reluctance expressed by various state governments to provide sites for the setting up of chemical plants.

With high capital costs involved in the acquisition and development of large tracts of land for the purpose, the Department of Chemicals and Petrochemicals has even suggested joint ventures between the state government and the private sector.

The private sector participation, would ensure a professional management of these sites, the department has suggested. Moreover, environmental considerations have also been the contributing factors for the government's move to float separate dedicated sites for the chemical sector.

Under these circumstances, the government feelsthat it would be advisable to concentrate chemical units in the country to few select locations instead of having them dispersed haphazardly all over the country.

These specific locations for chemical sites would also enjoy common facilities like power, steam, common effluent treatment and other infrastructure facilities like telecom and transport sectors. Amongst other factors, the most important one that the government wants in the selection of these sites is that the estates should be located away from a busy human habitation.

Apart from these factors, the units located in the these estates would also serve as an economic zone that could draw higher fiscal concessions to the sector.

Several industry leaders are of the view that even though they would welcome a dedicated location for the setting up of units, the government should consider the suggestions made by the industry itself.

"Not only should the government become a regulator in this case but more so it should also offer various fiscal andfinancial incentives to the industry in setting up of units in these estates," sources said.

The industry is also urging the government to come out with special fiscal schemes that would lure more of the new industrial units in the sector to enter the estates. Some of the multinational companies have expressed their desire to set up new units in these locations, provided substantial fiscal or financial incentive is offered to them.

The industry has been conducive to the proposal in general except for the fact that the government should weigh the pros and cons on relocation of the units of companies which are already in place.