All India Chemical Manufacturer's Association, All India Chemical Engineers Association and some educational institutes have pleaded with the Pondicherry government to review its decision to ban chemical units in the state.

In September last, the Pondicherry government banned establishing new chemical industries in the Union Territory. However, existing chemical units and units already under construction or nearing completion had been exempted from the ban but were directed to put in place effective pollution control means. The ban on chemical units was sure to affect the pharmaceutical industry in the country, more so in the South, which source most of the ingredients from the chemical units based in the Territory.

The Pondicherry government has not reacted to the petitions. The associations mentioned above have claimed that banning of chemical units in the state was not a solution to arresting increased pollution. They further claimed that most of the chemical units in the state have implemented pollution control means, and blaming the chemical companies for increased pollution was an exaggeration. They further claimed the ban on the chemical units would affect the supply to the pharmaceutical companies.

There are many small chemical companies operating from the Union Territory. Shasun Chemicals and Drugs Ltd, based in Chennai, is the only big name that is setting up a unit in Pondicherry, shifting production of a bulk drug from Cuddalore.

Apart from tax holiday, Pondicherry has been an attractive destination for the chemical companies in the south due to its closeness to Tamil Nadu and Karnataka where a major chunk of formulation manufacturers form the clientele base. Secondly, Tamil Nadu has also been slow on clearing chemical companies owing to pollution. Cuddalore in Tamil Nadu, a few kilometers off Pondicherry has the distinction of having a chemical zone where a majority of the big names, Shasun Chemicals, Tanfac Industries, J. K.Chemicals to name a few, operate.