“India needs to focus on investment areas, where it has strength based on tropical climatic conditions and deposits of ore and mineral”

It is now well recognized that the progress of chemical industry in India have not been significant in real terms during the last few years, ever since the concept of globalization was introduced. The liberalization of imports and the international players having unhindered market in India have created conditions, where several indigenous units, particularly in small and medium scale sector found that they have created conditions , where several indigenous units, particularly in small and medium scale sector found that they could not be competitive even in the Indian market. Large numbers of chemical projects have become sick and closed due to such reasons. Further many units have been forced to close down due to environmental regulations. Unfortunately, systematic and nationwide study on such closed units from the point of view of technology, imports and productivity level, are yet to be made. At present, the major expansion activity taking place in the country in chemical section is largely in the field of petroleum refinery sector, where a number of refineries are embarking on expansion and modernization programmes. There have been activities in gas and oil exploration, pipelines for transportation of gas, building of LNG terminal etc. Most of such activities are really in the nature of infrastructure development and modernization activities and not relating to setting up of basic manufacturing capacities.

Such situation should be a cause for concern, as the country appears to be losing the advantage that it has gained over several years, by setting up a large number of small and medium level chemical projects based on indigenous technology. Under the circumstances, there appear to be an urgent need for alternative model of growth for Indian chemical industry in tune with WTO and ecological trends. The country needs to focus on investment areas, where it has strength based on tropical and climatic conditions and deposits of ore and mineral. It should stop forthwith the practice of blindly copying the pattern of growth of the developed western countries, which have often landed the Indian units in trouble in the past. There has been a lot of hype about the growth of the bio technology sector, which are still in the preliminary stage in the country and are yet to prove themselves to be globally competitive. The government of India and the planning commission has a duty to lay down right guidelines and appropriate direction of growth for the chemical industry and allied sector. This can be done only by initiating nation wide debate on the subject and evolving some consensus opinion about moving further.

The recent experiences clearly indicate that India has special capability in the service sector which are skill oriented ad not so much of investment oriented. However, mere focusing on service sector nearly exclusively would undermine the strength and basic foundation of chemical industry in the long run. Strengthening of the manufacturing sector is necessary condition for growth and service sector by itself cannot fill the gap. No doubt, number of initiatives have been taken in recent time at national level in identifying appropriate growth areas such as thrust given by herbal sector, national focus on bidiesel and of course biotechnology sector etc. In all such areas, while there have been a lot of talk and discussions and claims, the ground reality with regard to the growth and progress is not adequate in real term, which anyone can understand on careful scrutiny of facts and figures. In such areas, there is need for careful acquisition of technology from abroad and co-operation with the international players selectively, even as the Indian units exploit the strength that the country already possesses. Clarity in ideas and prompt actions are very important.

In present times of global competitiveness, every player in the chemical industry has to keep himself adequately uniformed atleast in their areas of activities. Without such knowledge level built and maintained, it would not be possible to work out strategies for action. The unfortunate fact is that reading habit and knowledge level amongst chemical entrepreneurs and executives in India need considerable improvement. The Indian chemical industry has to address this problem with urgency that it deserves. In order to consolidate its position in the fast changing global market, the Indian chemical industry needs to modernize its processes and adopt latest packaging technology. The pesticide industry at present is characterized by over capacity, low capacity utilization and low investments in R&D. In order to become competitive it needs to undertake modernization programmes for cost effective production through improvisation in process technologies, production of eco-friendly formulations backward integration, up gradation of quality and adoption of ISO certifications.

In chlor alkali industry, the plants operating with mercury cell or the diaphragm technology needs to switch to cleaner ad more eco-friendly membrane cell technology. Presently 70% of the total installed capacity of caustic soda is based on membrane cell technology. In face of the changed scenario of globalization, lowering tariff and non-tariff barriers and consolidation through mergers and acquisitions, the Petrochemical industry which includes polymers, synthetic fibers and elastomers, is required to take urgent measures to stay in competition. Since the initiation of economic reforms, the polymer industry has upscale and upgraded by setting up of mega size petrochemical complexes. However the downstream plastic processing industry with 15,000 plastic processing units of which 75 % are in small-sector, needs up scaling/upgrade action to keep pace with the advancements in the upstream polymer industry.

Source – Engineering Review
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