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What Ails Indian Chemical Industry? – OpEd

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In several conferences and seminars, one usually hears about the rapid strides made by Indian chemical industry in multiple directions and boastful talk about break through in research and development efforts and Indian entrepreneurial initiatives

However, a careful study of the ground realities would readily highlight the fact that while there are isolated achievements and praiseworthy efforts, the overall picture is not as rosy as it is made to look.

The claims on rapid progress of overall Indian chemical industry are often made in vacuum, without being substantiated by the happenings on the ground.

Study of Indian import figures of chemical and allied products readily highlight the fact that the import of several chemicals are rapidly increasing year after year and in some cases at the rate of 10% per year and even more. This, obviously, indicates that the capacity build up efforts in Indian chemical industry are far from adequate.

There are number of cases where India has totally stopped production of very important chemicals such as vinyl acetate monomer, polyvinyl alcohol, styrene and have started entirely importing the Indian requirement.

Number of chemicals are imported in huge quantity which are not presently produced in India though they represent excellent investment opportunities and the Indian requirement entirely met by import, such as L-lysine HCl which is made from cane molasses or starch(import around 45000 tonne per annum) , citric acid which is made from cane molasses or starch(import around 85000 tonne per annum) and so many other products are not produced in India though feedstock for such products are readily available in India

There are number of products where the project promoters appear to be reluctant to go for capacity expansion or setting up new projects, though India has adequate experience in operating such projects . An immediate example is carbon black, where there is impending global shortage due to variety of reasons and Indian import is steadily going up. Carbon black is also substantially exported from India . Indian consumers of carbon black are complaining about the non availability of carbon black from domestic source and price increase by domestic producers, who enjoy the benefit of anti dumping duty. Some capacity expansion has been announced but they move at snail’s pace and lack of sense of urgency is obvious.

India is now betting big on promotion of electrified vehicles and Government of India has fixed tall target for electrified vehicle population. One of the important components of electrified vehicle is lithium ion battery (LiB), which is not produced in India. There are a few units in India who import cells and make only battery management system . Inspite of huge demand potential for LiB in India, only some preliminary proposals for setting up LiB project has been announced. Lack of sense of urgency and inadequate entrepreneur enthusiasm for setting up LiB project in India is glaring.

Around 2 lakh tonne per annum of rutile grade TiO2 pigment made by chloride process is imported in India, for which ilmenite and chlorine are the feedstock and which are readily available in the country. No new project has been announced for rutile TiO2 pigment in India.

Now India is betting big on solar power projects. Polycrystalline silicon is the important raw material for making solar power cells and its import is increasing.Polycrystalline silicon is produced from silica sand and chlorine which are readily available in India. However, no polycrystalline silicon project is being set up in the country. No firm proposal has been announced.

R&D efforts should be targeted to produce the chemical products in eco friendly manner with optimized cost and process parameters. New grades are being developed across the world in the case of several chemicals with improved specification to meet consumer expectations and to ensure eco friendliness. High efforts are being made abroad for developing technologies for bio based products to replace synthetic route. Some significant achievements have already been seen abroad with Indian contribution for the global technology development efforts for the bio based products remaining at negligible level.

In several of such areas, Indian R&D efforts are conspicuous by inadequate achievements.

India is large importer of crude oil and natural gas with little prospects for boosting the domestic production significantly. India has to find appropriate alternate source for fuel. One appropriate area is algae based production of oil. Algae is a crop that can be cultivated in large areas in India due to the tropical climate. Algae needs only carbon dioxide and sun light and water that need not be pure. World over, lot of research are being carried out for the development algae based products including oil, as algae contains 30 to 35% of oil. Significant progress has been made abroad and commercial production has commenced. Little efforts has been put forth in India in developing algae based technology.

Whatever achieved in research and development efforts in the chemical sector in India show that the R&D commitments are not what it should be.

Indian chemical industry often complains about what is termed as lack of level playing ground, which Is not borne by the facts. There is need to be competitive in the global market and no chemical industry should think that it should get preferred treatment in India to operate in India and global market, which is no more possible considering the WTO regulations.

While the investment constraints are pointed out as stumbling block for setting up large capacity plants of global size, the fact is that there are many speciality chemicals which are now imported in increasing quantity in India, for which large investments are not required.

The issue is that often for setting up several chemical projects even of small size, Indian chemical industry is looking for technology from abroad. In several cases, it is seen that the investment in chemical industry are limited by the extent to which international organizations are willing to provide technology and global market support.

Another matter of concern is that corporate planning strategies are not given due importance that they deserve in Indian chemical industry. Corporate planning strategies imply the continuous tracking of developments with regard to demand supply trends and technologies on global scale and efforts to identify appropriate opportunities based on the strength of the individual units. This does not seem to be happening in adequate measures. There appear to be lack of knowledge accumulation efforts.

All said and done, it is necessary to recognize the serious attitudinal problem faced by the Indian chemical industry, which has to be taken note of and can not be ignored any more.


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N. S. Venkataraman

N. S. Venkataraman

N. S. Venkataraman is a trustee with the "Nandini Voice for the Deprived," a not-for-profit organization that aims to highlight the problems of downtrodden and deprived people and support their cause. To promote probity and ethical values in private and public life and to deliberate on socio-economic issues in a dispassionate and objective manner.

One thought on “What Ails Indian Chemical Industry? – OpEd

  • May 14, 2018 at 4:17 am
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    Well explained about the status of chemical industry in India, second largest populated country which depends on imports for lot of chemicals.

    Thanks a lot

    Reply

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