There is a growing demand for sourcing chemicals from India in order to create an alternative to China however, I don’t see it as a landslide but as a trickle and the reason I say that is because China continues to have a much bigger share in chemicals including specialty chemicals says Adnan Ahmad, Vice Chairman & Managing Director, Clariant India.

 

“As a company, we always wanted to explore beyond China and, therefore, have invested in setting up a few plants in India. But we feel it is a gradual process and depends on many factors. It is good to witness that we are beginning to source not just chemicals but the supporting equipment required during the processes from India as well. Going forward, important areas such as environment and safety should be binding on the business irrespective of the size and should be free from quarterly financial performance. That requires a strategic shift that every company has to ensure. If India were able to demonstrate tremendous responsibility in these areas, we will see a change in perceptions of investors. There is hardly any doubt that Indian industry will witness a huge demand for chemicals yet what remains to be seen is how much of it we can leverage through domestic manufacturing. From the current 3% of meeting the global demand, we need to achieve the target of 10% of supply as soon as possible. We need a proper plan to achieve that,” adds Ahmad.

 

Ahmed spoke alongside other industry leaders at the ‘NextGen Chemical and Petrochemical Summit 2021’ organized by Indian Chemical News from 7-8 October, 2021. Titled as ‘Specialty Chemicals: Expanding Its Horizon’, the panel discussion was moderated by Amit Gandhi, Managing Director & Partner, Boston Consulting Group.

 

“In terms of sustainability, we at Galaxy started much earlier. From basic surfactants to high end and specialty surfactants, we have evolved over the period of time. At the same time we prepared ourselves well in advance on sustainable practices. In terms of innovation, talent and patents, we have been doing well. During our engagements with the overseas customers, we found that they were keen to shift operations to India. On the demand side it is good but at macroeconomic level, China is still huge. Yet it doesn’t deter us from creating our own niches," says Yogesh Kalra, Head - Global Business Creation, Galaxy Surfactants.

 

India has been a big growth market, especially in the segments such as natural, herbal and nutrition segments. Apart from the government programmes such as atma nirbhar bharat and Make in India, we need to pay extra attention towards environment and sustainability. While it may be a bit costly, we need to invest significantly into the environment and sustainable technologies. As an industry, we have invested 10 years ago and we are leveraging the same now. We have many sustainable and green molecules lined up with us. No doubt India is poised to grow and on a growth trajectory,” added Kalra. 

 

“The world class manufacturing we are talking about should mean that the industry prepares itself well and upgrades its product portfolio. It should happen on two counts: One it should be adapting to the new global regulations and not consider them as a threat. Another is that the equation has to be based on what is the global option. Operational elements such as KPI, looking at carbon footprint as a principle of circularity. The government is working on REACH adaptation in India. In my previous work experience, I have seen how difficult it was for Europe to adapt to such regulations and therefore, Indians should learn from the existing best practices in the world and start getting better prepared. This is also going to be a significant value driver as our exports will be at a global level. Infrastructure will play a huge role in the growth of specialty chemicals, especially the better road connectivity and special corridors for smooth transportation. As far as subsidies are concerned, these might not work often if there is disconnect with industry's actual needs. We surely need to do more PPPs to set up mega clusters,” says Rahul Tikoo, MD - India Subcontinent & Polyurethanes India Business, Huntsman Corporation.

 

Sharing the experiences from her company’s perspective, Vinati Saraf Mutreja, MD & CEO, Vinati Organics Limited says, “Vinati Organics started its journey in 1991 when it began manufacturing isobutylbenzene (IBB), a raw material for ibuprofen, the drug. Chinese companies used to make IBB as well and we did face competition during early days. Later in early 2000s, China exited this business altogether and Indian companies started to supply it globally including China too. Our company later diversified the business into specialty monomers which are used to make water treatment polymers and various other industries. Despite competition in this product category, we occupy 65 percent of the market in the US. We have 3/4 capacity than China and customers think India is a better bet in terms of safety. Therefore, I feel China plus one strategy has tuned out well for our industry. The government is increasing the tax rate by forcing you to invest. We can have better policies to build infrastructure and attract investments. We need more ports, an inland water transport system, and industrial zones like Special Economic Zones (SEZs) to expand.”

 

“Over the period of last 10 years, we have already started working on the new matrix of regulations despite the fact that currently there is no such compliance requirement. In terms of environment, there are many actions including structural changes that we as a company will be undertaking. To my mind, all companies will do this, although speed and timing may vary. But eventually all will be there. Companies that embark on this journey much earlier will have an advantage over others. For global companies, they are increasingly seeking carbon neutrality, sustainable practices, renewable raw materials, circularity etc from their suppliers. As a company, we are looking at reducing our carbon emissions by 30 percent by 2030. Many of our initiatives are now on various areas such as renewables, gas, and biomass fuel to achieve the same. We are using soda ash waste for manufacturing cement, also using plastic waste for the same as allowed by authorities. We are developing two new products from 100 percent waste. This area will be increasingly focused upon by a lot of other companies too,” says Shohab Rais, COO - Indian Chemical Business, Tata Chemicals Limited.

 

“In case of a few specialty chemicals you see trickles and in some there is a landslide. At the same time engineering and innovation has played a significant role in differentiating a lot of Indian companies from the Chinese ones. Indian companies have world class efficiencies in cost vs asset utilization, reduction in expensive chemicals like catalysts, and reuse as a game changer. Compared to Chinese who may be good at huge volumes, Indians are very good innovators in terms of engineering, R&D and some of the sustainable practices. More particularly, the Indian government has been sensitive towards the environment, right from the year 1995. So, we have gradually moved on to world class EHS standards. Specifically in specialty areas, we have geared up and were able to outclass many Chinese manufacturers. We are sole producers of a certain range of specialty chemicals in the world. With EU REACH like legislations coming up across the world, Indian companies can certainly do better. Chinese may do well for the bulk but we are by and large good high value low volume specialty chemicals. Though I am not a big fan of subsidies, I still believe that appropriate tax benefits can help catalyze investments into the chemical sector significantly. Government, therefore, must understand the industry sentiments and devise conducive policies to supplement its growth," says M. P. Aggarwal, Chief Promoter, Sajjan Group of Companies.

 

“There is no question about the fact that the chemical industry is certainly going to grow. The old demographic dividend. The China plus one is real but not automatic as it will require efforts by us. And it is not a large-scale volume move from China but we have to start from small volume moves to attract investment. Sustainability is important and so is the environment but it will require effort and having KPIs across the value chain will help. The better tax structure and infrastructure will help,” says Amit Gandhi, Managing Director & Partner, Boston Consulting Group.