Specialty chemicals industry must decouple from China to chalk out its own path

Green molecules & sustainability to drive future growth of specialty chemicals

Experts believe industry must move on from the China plus one mindset, focusing instead on collaborative models of R&D and development of world class sustainable products. 
 
“With the kind of talented workforce and capacities India has, there is no reason the specialty chemicals industry can’t serve the 10 percent of global demand. China thinks longer term and we need to learn and look at the fundamental differences to make a longer impact. We need to decouple from China and chalk out our own path. Otherwise, we may win the battle but lose the war,” says Rupark Saraswat, CEO, India Glycols Limited.
 
Saraswat spoke along with other industry experts at the E-conference on ‘Specialty Chemicals: Taking The Right Path For Growth,’ organized by the Indian Chemical News on November 17, 2021. The online event was moderated by Pravin Prashant, Editor, Indian Chemical News.
 
“Sustainability is a great opportunity. As businesses we must think how our products can create a sustainable future. Not only must we focus on the product or molecule but also on the impact these can make. We have created a dire situation for sustainability. The cancer train that runs from Bhatinda in Punjab to Bikaner makes us remember the disastrous side effects of chemicals, Yamuna water contamination in Delhi is well known. In terms of energy, our oceans are absorbing a couple of atom bombs every few seconds. Therefore, sustainable products will determine the future. Whether it is developing electric vehicles or hydrogen, the specialty chemical industry has to play a big role. Bottom line is changing and it is a good thing. Relationships with government and regulators must be of collaborators not red tape. We do very little collaboration among ourselves apart from global partnership for technologies. People and knowledge are important to build a strong ecosystem, and therefore, we need to collaborate more. We have great opportunities ahead,” adds Sarswat.
 
Rajen Mariwala, Managing Director, Eternis Fine Chemicals Limited says, “We need to define the time frame to achieve the target of fulfilling the 10 percent of global demand. We need to get out of the mindset of China plus one and not be obsessed with what China is doing. It is well known that acetic acid, phenol intermediates and many key chemicals are still being imported. We need to manufacture these in India and create a full supply chain. There is a need to make derivatives in India or else we won't be able to make any progress. As we aim to grow bigger, where is the band with and capability? The safety standards need upgrading due to the number of accidents. To me one of the biggest issues as a chemical company is the scale. If you want to scale, you need infrastructure. Why can’t we have an industrial level prototype? CAPEX that companies will save would be substantial if they ensure digitalization. Workforce skill institutes need to be up gradation too. We need to create capacities across the country, not just a few ports. Fundamentally we need to focus on scale as a country. Doing this right and getting out of jugaad mode. Industry must not wait for the government's help only but needs to put its act together.”
 
As per Sunil Chari, MD & Co-Founder, Rossari Biotech Limited, “Globally, there is an opportunity for US$ 800 billion which is expected to reach US$ 1040 billion, registering a 4 to 10 percent jump. In India, we are expecting US$ 32 billion to double to US$ 64 billion. India needs to think big as we need big players in specialty chemicals. Since the focus is more on the domestic market, the increased spending will lead to more growth of specialty chemicals. Another fact is that innovation alone will not spur growth but the market demand is equally important. At Rossari, we are focused on innovation that helps in increasing revenue. With backward integration focused on a few chemicals, technologies are building blocks for revenue. There are a combination of factors that helped Rossari to do well. At the industry level, the challenges such as pollution and environmental damage remain a huge concern. As a result, there is a paradigm shift towards the green. We must remember that if we cut corners and bypass rules, we won’t grow. The green molecules are a big opportunity that will drive our growth.”

“For successful sustainability practices, we must see not only what we can do inside but also outside of the company. We must analyze the accidents and audit our vendors for safe purchases and safe disposal of chemicals. Sustainability is about process chemistry and right footprints. There should be continuous efforts to make specialty chemicals safe for consumers. To bring finance and more efficiency, we need to create value for the products and make them more valuable. Need to look at sustainability from all angles. Bio based technologies going forward are the only way out. At the company level, we have gone the natural way and hope a lot of companies will follow. We collect waste from forests and turn it into recyclable products. Among the challenges that need to be addressed are accelerating our innovation efforts, filing more patents and ensuring close coordination between industry and academia. The supply digitization, PLI scheme and taxation benefits for this industry are necessary to make India more attractive,” says Anjani Prasad, Managing Director-India, Nepal, Sri Lanka, Archroma.
 
“Whether it is supply chain or investments by the government, there have been disruptions both prior to the pandemic and now also. We have seen the developments and at the end of the cycle we have tried to see opportunities. The challenges at the moment are that there is no PLI scheme for specialty chemicals, there is a dearth of talent and infrastructure for the talent creation pool is missing. Technology that is required to drive the growth is missing too. The fact is that the top 50 companies out of 1000 have 60 percent contribution to growth whereas the rest of them collectively have 40% contribution. These top companies require investments for them to grow further. The timelines need to be defined for challenges to be addressed. Basic ecosystem needs to be strengthened besides retaining and developing talent. As a company, we are investing 10 percent of revenue back into the R&D and we are not just sponsoring not only the talent development programs but PhD students at university level directly. We have supported the entire batches at IIT Mumbai and Guwahati. We are introducing new courses from technology and chemical perspectives,” says Saiprasad Jadhav, CEO & Ex. Director, Epsilon Carbon Private Limited.

Abhay V. Udeshi, Chairman, Jayant Agro Group says, “Castor oil is a renewable product with numerous applications in chemical products such as polymers, plastics, pharmaceuticals and so on. It can go anywhere and everywhere as compared to other oils. Being a non-edible oil, it doesn't affect the food chain. Countries such as France, Germany, US, China are major users of the castor oil. It is being used in 80 different countries. The consumption in India is far less domestically but we are hopeful that there will be growth in coming years. There are a lot of castor oil products that are substitutes and can add to revenue. Since India has huge potential, the government should give more emphasis on value added products rather than just raw material. It must realize that and provide faster clearances as it would help in increasing the bio based products and improve exports. For green molecules to be sustainable, at Jayant Agro we have started a farming code followed by sustainable goals developed through a success model. Government must bring in policies to help green molecules. Initiatives such as BSR reports for industries are good and have to go beyond one company and rather as a sector. Sustainability is in our blood and India has a very bright future.”
 
““If we look at the chemical industries individually, growth will appear difficult but together there is a value proposition. There is US$ 46 billion global demand. We need to build a workforce at the university level and analyze data properly to take the industry to the next level. In India, there are 178 chemical clusters and each one of them has thousands of small and large chemical manufacturers. Most of these are based in Telangana, Maharashtra and Gujarat. In the last 15 years, we have reached up to US$ 16 billion worth imports. We need to reduce the dependency on other countries and in fact the government is working on self-sustainability. Rather than importing the product, we can make it available here. Again the processes involved in buying and selling of chemicals are long-drawn and time consuming. In the last 3 years, we have achieved significant results. To address the issue of quick availability, we have created a model where a customer is getting the benefit of technology,” says Dr. Shaik. Rafi Shaik, Founder and Chief Scientific Officer, Carbanio.com.

“When we talk about growth of industry, we will at the same time be looking at the quality of our products for the exports. As a part of that, we have to follow the regulations including REACH. While REACH regulatory implementation by companies got postponed due to Covid-19 pandemic, we are ready to prepare chemical industry for it. Agilent is supporting the industry through innovative solutions for R&D. We have developed methodologies, pigment solutions and much more that match the REACH regulations. With our 3 state of art Centre of Excellence at Bengaluru, Mumbai and Manesar. We have high end systems and these three centres working on the workflow. To address the gaps, industry will need to increase the CAPEX for R&D for analysis of heavy metals and other impurities, says Manoj Surawade, Sales Development Manager, Chemicals & Energy Market, Agilent Technologies.