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Chemical Industry in India

The Indian Chemical Industry is Poised for Substantial Growth

Page: 3/3

Corrective measures for future

growth

According to Ravi Kapoor – Chairman, ICC, Gujarat Chapter, although it has immense potential for high growth, the specialty chemicals segment is growing at a modest rate. It is a fact that the number of global size projects in the specialty chemicals segment — as is the case for the entire domestic chemical industry — is very meagre.

In order to increase the market share, concerted efforts have to be undertaken in the field of R&D. Being highly knowledgeintensive, the specialty chemical segment requires availability of skilled workforce to undertake continuous R&D initiatives. Although India is famous globally for having the most intelligent minds, at present, very few people are entering the field of Chemistry. This issue needs to be addressed on an immediate basis to ensure the growth of the industry.

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Another major bottleneck is the lack of proper infrastructure. There is an immediate need to undertake greenfield as well as brownfield projects in order to ensure sustainable development. This holds true not only for the specialty chemicals segment but the entire domestic chemical industry.

The Indian government is planning to invest US$ 280 bn to build, subject to European and Chinese examples, six chemical clusters (Chemicals & Petrochemicals Investment Regions, PCPIR) with refineries and crackers in their centre which shall supply the necessary basic chemicals. The table above shows selected investment projects in region where the approval has already been granted. Therefore, with a number of PCPIRs coming up in India, players in the specialty chemicals segment should leverage benefits being offered by the existing and upcoming chemical clusters throughout the country. The PCPIR Policy is an initiative to keep abreast with the evolving, changing needs of the industry and acts as a window to ensure a holistic approach towards promoting the petroleum, chemicals and petrochemical sectors in an integrated and environmentallyfriendly manner. This policy is expected to fundamentally change the way industries are provided with seamless and integrated services, and represents an initiative to change with the times and to keep abreast of the evolving needs of the industry.

The PCPIR is a specifically-delineated investment region, with an area of about 250 sq km (with a minimum of 40 percent of the designated area earmarked for processing activities). This region will be a combination of production projects, public utilities, logistics, environmental protection, residential areas and administrative services. In 2007, the Cabinet Committee on Economic Affairs (CCEA), approved the Policy Resolution for setting up of PCPIRs to reap the benefits of co-siting, networking and greater efficiency, through use of common infrastructure and support services. As per the PCPIR Policy, the Government of India will ensure the availability of external physical infrastructure linkages to the PCPIR, by way of rail, road (national highways), ports, airports and telecom in a time-bound manner.

This infrastructure will be created (or upgraded) through Public Private Partnerships as far as possible, with the Central Government providing the necessary viability gap funding (VGF) through existing schemes. Overall, if the bottlenecks are addressed, Mr Kapoor feels that the future prospects look bright for the specialty chemicals segment. As a matter of fact, the Western region in India is already being considered as a hub of specialty chemicals, with the region accounting for almost 45–50 percent of the domestic chemical industry.

Mr Kapoor also authenticated this view by saying that Gujarat is performing very well in the specialty chemicals segment as the state is surrounded by several chemical formulation units.

Mr Kapoor draws attention to the fact that specialty chemicals consume less amount of natural resources, both power and water, which serves as a significant competitive edge for the segment. Moreover, intermediates required by the specialty chemicals segment are also not very expensive. Therefore, the key is to stick to the core goals to ensure long-term growth of the segment.

* The author is a member of the PROCESS India Editorial Team.

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