A nation without Oxygen or just a failed system? 10 things to know about Oxygen Regulation in India

Yesterday, a Bench of Justices Vipin Sanghi and Rekha Palli of the Delhi High Court slammed the Delhi government for the acute Oxygen shortage amid the COVID-19 crisis and sought a status report.

As the people battle with an acute medical oxygen shortage across the country, here are a few things you may want to know about Oxygen production, regulation and supply in India.

1. Oxygen is of two types

There are two types of oxygen - Industrial Oxygen and Medical Oxygen.

Medical Oxygen is high purity Oxygen used for medical treatments and is developed for use in the human body. Medical Oxygen cylinders contain a high purity of Oxygen gas. No other types of gases are allowed in the cylinder to prevent contamination. There are additional requirements and rules for medical Oxygen, including requiring a person to have a prescription to order Medical Oxygen.

Industrial Oxygen is focused on uses in industrial plants, including combustion, oxidation, cutting, and chemical reactions. The Industrial Oxygen purity levels are not appropriate for human use, and there could be impurities from dirty equipment or industrial storage that could make people ill.

2. India’s daily production of Oxygen is still more than its demand for medical Oxygen

As per the Ministry of Health and Family Welfare’s statement issued in a press conference, there is sufficient production capacity of around 7,127 MT for oxygen in the country, and as per need, the surplus oxygen available with steel plants is also being utilized. The total production has been 100 per cent since the past two days, since demand for Medical Oxygen has gone up rapidly.

As of April 12, 2021, the Medical Oxygen consumption in the country was 3,842 MT, that is 54 per cent of the daily production capacity. The maximum consumption of Medical Oxygen in the country is by the states of Maharashtra, Gujarat, Madhya Pradesh, Uttar Pradesh, Karnataka, Tamil Nadu, Delhi, followed by Chhattisgarh, Punjab, Rajasthan.

3. From 2019-2020, India’s export Of Oxygen increased tremendously

Between April 2020 and January 2021, India exported over 9,000 metric tonnes of Oxygen, according to a Ministry of Commerce report. In the financial year 2020, only 4,500 metric tonnes of Oxygen were exported. From January 2020, when India was exporting 352 metric tonnes of Oxygen, the exports increased by a staggering 734 per cent in January 2021.

The country exported 2,193 metric tonnes of Oxygen in December - a 308 per cent increase compared to 538 metric tonnes in December 2019.

Government sources have said that this is "malicious propaganda" and that during April 2020 to February 2021, while 9,884 MT of Industrial Oxygen was exported, only 12 MT of Medical Oxygen was exported. Further, the government’s version is as follows:

"Majority of these industrial oxygen export was in December and January when medical oxygen consumption reduced to 1,418 MT/day from 2,675 MT/day in September. This against near 7,000 MT/day capacity resulted in no threat to medical oxygen supply while protecting jobs in oxygen industry."

This, however, defies logic. Today, in order to boost the availability of Medical Oxygen, if there is a ban on all industrial use of Oxygen, then clearly, the readiness of India for the oxygen shortage cannot be seen by decoupling the Industrial and Medical Oxygen supply. Therefore, had there been a long term vision of the COVID-19 situation, clearly such huge amount of Oxygen export, even of Industrial Oxygen, should have been done with caution.

4. Medical Oxygen is governed under the Drugs and Cosmetics Act, 1940

The Supreme Court in the matter of State of Andhra Pradesh v. M/s Linde India Ltd decided that Medical Oxygen IP and Nitrous Oxide IP fall within the ambit of Section 3(b)(i) of the Drugs and Cosmetics Act, 1940 Act.

As per the National List of Essential Medicines 2011, which constitutes Schedule I of the Drug Price (Control) Order 2013 - "Oxygen" and "Nitrous Oxide" are included as "anaesthesia." The Drug Controller General of India is responsible for approval of licenses of specified categories of drugs, including manufacturing of medical Oxygen as per Drugs and Cosmetic Act, 1940 and Gas Cylinder Rules, 2004 under which filling, ownership, transport, and import of such gases is regulated.

As per Section 26B of Drugs and Cosmetics Act, the Central government can regulate or restrict, manufacture, etc., a drug in the public interest. The provision states:

"Without prejudice to any other provision contained in this Chapter, if the Central Government is satisfied that a drug is essential to meet the requirements of an emergency arising due to epidemic or natural calamities and that in the public interest it is necessary or expedient so to do, then, that Government may, by notification in the Official Gazette, regulate or restrict the manufacture, sale or distribution of such drug."

5. Control and supply of Oxygen to states is being reviewed by Empowered Group-II

Control and supply are reviewed by Empowered Group-II (EG-II/2), constituted by the Prime Minister's Office (PMO) to look into the Oxygen supply to states. The EG II consists of all the states and all major Oxygen producers (AIIGMA), Petroleum and Explosives Safety Organisation (PESO), the road transport ministry, and the Indian Railways. It has reviewed the supply of Oxygen and recommended prohibiting the supply of Oxygen for industrial purposes by manufacturers and suppliers forthwith from April 22 till further orders, except for nine specified industries.

The Ministry of Family and Health Affairs, the Commerce and Industry Ministry, Department for the Promotion of Industry and Internal Trade (DPIIT), and Central Drugs Standard Control Organisation of the Central government are engaged in dealing with the Oxygen supply crisis.

6. No industrial usage of Oxygen is permitted currently

In order to maximise the production of liquid Oxygen, MHA, Government of India issued an order dated April 25, 2021 stating that no liquid Oxygen will be supplied to any industries except for medical use.

7. There is no ban on inter-State transport of Oxygen

On April 22, the Ministry of Home Affairs (MHA) invoked Section 10(2)(1) of Disaster Management Act, 2005. It mandated that there shall be no restriction on the inter-state and intra-state movement of persons and goods. Through this order, unobstructed inter-state movement of medical Oxygen is ensured. Any violation will lead to personal liability of District Magistrates, District Collectors and police officials. This is directly monitored by Empowered Group-II (EG-II).

8. There is a price cap on Liquid Medical Oxygen

Before the epidemic, Medical Oxygen was not a controlled commodity. But in September 2020, during the COVID-19 breakdown, National Pharmaceutical Pricing Authority (NPPA) - which comes under the Department of Pharmaceuticals (DoP) - stepped in after seeing the report of shortage and hoarding of Oxygen and has brought Liquid Medical Oxygen (LMO) under price control for the next six months. This move was made following the recommendations of an expert committee and the Union Health Ministry under the Disaster Management Act (DMA), 2005, given the extraordinary circumstances. This notification was further extended on March 31, 2021, for a further six months or till further orders to ensure availability of Medical Oxygen for COVID-19 management.

9. Blackmarketing and hoarding Of Oxygen is illegal

There is no law or regulation on buying Oxygen and/or Oxygen cylinders, but to curb hoarding and black marketing, restrictions are imposed on the buying and selling of Oxygen. There is a major problem being faced as regards transportation of Oxygen. Special tankers are required to drive Oxygen in larger quantities across states, but there aren’t enough to move the entire Oxygen production. Similarly, there is a shortage of cylinders, which aren’t being refilled fast enough to meet demands.

10. A license for manufacture of Medical Oxygen can be issued within 24 hours

Generally, it takes a long time to complete licensing and set up a Liquid Oxygen plant. But on the proposal of the All India Industrial Gas Manufacturer Association (AIIGMA), DGCI has allowed the license to manufacture medical Oxygen within 24 hours to those who have already set up their Industrial Oxygen plant.

In light of this, a few questions arise. First, if India has enough quantity of Oxygen production, why is there still a shortage? Secondly, who is to blame for shortage and distribution of Oxygen, if its supply is being governed by a group constituted by the PMO’s office? Third, why did we need to export so much Oxygen (a whopping 734 per cent increase) from January 2020 to January 2021? Fourth, what challenges does the current Oxygen regulation system pose to the constitutional vision of Federalism? Finally – are we a nation without oxygen or just a nation with a failed system?

The authors are Delhi-based advocates.