“The pandemic has accelerated E-commerce, artificial intelligence (AI), and digitization and has changed the way in which the chemical industry used to function, helping us to compete better. Readjusting measures in China due to their pollution laws have given us an edge. The dependence on intermediates can be greatly reduced if we do backward integration. Increasing our expenditure on R&D could help us grow and lead towards self-reliance. Import substitution is a way forward just like enhancing incremental R&D, partnerships, advanced chemistry and biology. By being resilient and agile, we can go way ahead,” says Nadir Godrej, Managing Director, Godrej Industries Limited and Past Chairman, CII National Committee on Chemicals & Petrochemicals.

 

Godrej spoke at the CII CEOs session on 'Driving Growth and Competitiveness Chemicals and Petrochemicals’ at the Indian Chemicals and Petrochemicals Conference (ICPC) 2021 organized by the Confederation of Indian Industries (CII). 

 

“There is a lot of scope for specialty chemicals. At Godrej, are producing sophorolipids and other biological products. We were earlier a fully chemical company but now we do a lot of fermentation. These products have a lot of advantages and are pure gold. These are antimicrobial and give a lot of sterilization. Our portfolio expands every day and I think there is a huge potential for exports,” adds Godrej. 

 

"Discretionary spending is yet to reach the pre Covid levels. It will, therefore, require the customers' confidence to reach such levels. From a demand perspective, we need to come to the consumer demand level and I am optimistic about it. Supply chain challenges will continue this year but the situation is improving. While India has a fair amount of crackers and infrastructure, we lack building blocks that connect upstream with downstream. There is a need for connecting bridges between upstream crackers and downstream specialty chemicals. Next 5-10 years will play out fairly good. We need to avoid the conventional path. We are starting from scratch in many value chains and we can have sustainable ways that can give us an edge in the global market. We must innovate greener technologies. I see the next 10 years as not a copy model of what China or Europe did but create a new leap of faith. Direct jump from Bharat 4 to Bharat 6 has given us confidence in terms of technological prowess," says Krishnamohan Narayan, Managing Director, BASF India Limited.

 

"It is important that companies start allocating enough funds for new R&D and innovation, also making a transition towards sustainability solutions. BASF Is committed to investment into R&D and innovation. Despite lagging in a few areas, I am sure we will catch up in the next 5-7 years. We will see a significant production of EVs. We will evaluate and do what is required whenever we have critical mass. Every Capex cycle, we add more capacity and witness more demand,” added Narayan. 

 

“We need to enable a robust foundation for chemicals to solve global problems. Scale is going to matter in the longer run to fortify our global position. I feel we shouldn't look at producing cheaper products. The competitiveness has to come from sustainable products. Pepping innovation, better investments into innovation and R&D infrastructure setups need to be a part of our strategy. We should be supplying to counties not just in terms of volumes but also to add value. As an example, our Baroda based facility supplies to 36 countries and it is not just that the products are cheap. We have invested into the innovation for years and are now reaping the fruits. This is the kind of model we have to follow,” says Rahul Tikoo, Managing Director, Huntsman International India. 

 

“Indian chemical industry has done remarkably well. Many global companies have set up bases in India to start innovation processes. It is extremely important to look at the sunrise sectors. Electro-mobility, battery technology, resilient supply chain management and so many other areas are being talked about. We should be looking at backward integration to remove our dependency on other countries like China. The mood in the industry from a demand perspective is very strong. The end application segments such as paints, coatings, agrochemicals, water treatment, dyestuffs are just a few examples. The demand will continue around 2022. Among the challenges are rising costs on raw material and energy. In Europe and the US, energy cost has witnessed 300% increase and freight rate has witnessed 700-800% increase. Even after paying a hiked freight charges, it is still difficult to move the vessels. Sustainability is something we have taken seriously and Lanxess is ranked number one globally. We will be 85% climate neutral by the end of this year. We are looking at being CO2 neutral. Any sustainable growth will have to be on the back of innovative technologies,” says Neelanjan Banerjee, Managing Director, Lanxess India. 

 

“China plus one strategy might be working out but these are early days to conclude. To say that China's manufacturing days are over wouldn’t be correct as the world is still dependent on it. Therefore, rather than just looking at competing with China, we need to look at sustainable ways. In the 1960s, the Singapore government decided to set up a 7,400 acre chemical park at Jurong with 85 chemical companies from US and Europe. Estimated US $15 billion worth business happens from the park itself. Later in the 1980s, they set up the Singapore Development Board and they set up a common R&D center for all the companies. Plug and play was clearly visible at that time. With connected pipelines, a network could come into play. Similarly, we need a comprehensive approach with value chain integration happening. The chemical industry doesn’t just want plants but also the effluent treatment systems. There is no reason we should only talk about China plus one when we have resources in our country. There is a demand for chlor-alkali. At Grasim, we have 25% capacity and market share in the country. We continuously look at the growth and recently announced brownfield in Jharkhand. We are witnessing the completion of a lot of projects by the industry. There has been a fair amount of capacity additions by all players. The cost effectiveness, power factor, and supply chain are critical. The alumina and textile have started coming back to pre-Covid levels but are 4% back in deficit. Hopefully, the omicron doesn't take away the progress achieved so far,” says Jayant Dua, CEO, Grasim Industries – Chemical Division.

 

“The support provided by industry during COVID-19 and the sense of optimism shown by CEOs is appreciable. While there is a cautiously optimistic approach, we must also remember that India has emerged strongly from various kinds of crisis situations in the past. The predictions made in many recent reports for 2022 and 2025, it has been suggested that India will do better. The government's resolve on self-reliance is clear and in the direction, the PLI Schemes show its intention to achieve goals. Chemicals and petrochemicals form the input of many products in other industries. Therefore, if textiles, automobiles or other key sectors grow, the industry too will do well. There is a good potential for reducing the compliance burden and better policies and we are working on that. On the renewables side, we are moving towards better. Industry is poised to register a good growth in the future,” says Yogendra Tripathi, Secretary, Department of Chemicals and Petrochemicals, Government of India.