The two PCPIRs at Dahej and Vizag are good initiatives but given our aspirations, India needs bigger dedicated zones for chemical manufacturing companies, says Maulik Patel, CMD, Meghmani Finechem Limited. "The fact is that they are just getting land from PCPIRs and not the facilities or any plug and play facility. The way prices have skyrocketed currently to as high as Rs. 2,500-3,000 per square meter, even if private players want to develop, it is not feasible at such rates. We must learn from China and Germany where there are dedicated chemical clusters. This is the time the government must pitch in to create infrastructure for chemicals. If the raw material and feedstock are available, India can do well. We need to think way ahead,” Patel adds.  

Patel spoke at the e-Conference on ‘Chemical Industry Outlook 2022’ organized by the Indian Chemical News on January 21, 2022.

“Because of the FTA agreements, there is a negative impact on India in terms of competitiveness. Apart from meeting the domestic needs, India must encourage global manufacturing. The PLI scheme is good but the fact is that we are still dependent on third countries for raw material. In terms of energy availability, we need to gear up as there are huge gas and coal price hikes. The government has come up with a hybrid policy with solar and wind together. Since the states are working in isolation, it needs to be unified as one nation policy, Patel adds further. 

“We need 1,000s of acres for making the chemical industry globally competitive. The raw materials and infrastructure, roads, ports, towns around the plants to house the workforce. We need to think about everything on a global scale. The license raj and old mindset needs to change. While we are doubling our revenue figures, we need to understand that we are still tiny as compared to the USA, China, Germany, and South Korea. Taiwan and South Korea, despite their small size, have a big chemical space. We need to think of global scale industrial areas and provide our industry with good incentives. Since the land costs are very high, it puts us in a strategic back step,” says Vikram Shroff, Director, UPL Limited.

“Government must realize that the chemical industry is the backbone of all other industries. As India's GDP rises, the country will consume more chemicals yet we need to be careful about Brand India. We need to improve on environmental parameters and systematically improve the overall ecosystem. Moving on from just US$ 300 billion, we need to take steps to reach a US $800 trillion strong industry,” adds Shroff.

"India has always demonstrated the will. Whenever there is a demand, we have enough entrepreneurs to fulfill it. PLI schemes, semiconductor and electronics, and advanced cell chemistry for EVs will drive demand. Currently precision plastic components worth Rs. 400 crore are imported in India. We need policies to substitute such imports. We need large clusters for the operation of large scale plants. There are two opportunities: First is the EV two wheelers where we could become leaders by creating infrastructure and the government should provide incentives for producing locally. Second is the battery cell and for that we need to create an entire value chain," says B. K. Sethuram, MD-India & GM-CE Next Polymers, Celanese.

"As we move ahead, Sustainability and a circular economy without question are the most important things we owe to the coming generations. Sustainability is beyond just carbon imprints. We need to frame policy and regulations in an appropriate manner. There has to be a holistic set of applications and scrappage policy for cars and energy efficient cars. We need scale in the recycling business and entrepreneurs should see big opportunities here. Policy, regulations, incentives are required to make it attractive for industry," adds Sethuram.

“India is the 8th largest importer yet 14th largest exporter of chemicals. There is a huge gap to fill. Having a US $300 billion target by 2025 is fine but opportunity should be much bigger. At the same time, there is clearly a lack of talent in India. I don't see the millennial showing much interest towards chemical engineering and developing chemical molecules. It is a big challenge. Gender diversity is an issue so is overage employees. For a growing industry, we need flexibility and do away with old setups. We need to make it more glamorous,” says Suresh Kalra, MD & Head of RBU-Asia, Hubergroup.

“While it’s obvious that bigger economies have better infrastructure, even the smaller nations such as Taiwan and South Korea have bigger SEZs. The chemical manufacturing companies get everything in a cluster and they don't have to go to other places. We need to follow best practices such as a circular economy. We don't need to reinvent a wheel here but follow the existing efforts and do the best,” adds Kalra.

“During the pandemic there have been changes in supply demand metrics, trade protection metrics, and anti-dumping duties that are used to rate the companies. Many rules were amended by the government to prevent the misuse of the FTA agreement. Hopefully the PLI scheme for chemicals will be addressed in the budget. On the logistics side, we can first look at challenges before COVID-19 such as the lack of rail connectivity, high turnaround time at ports. In the last 6 years, infrastructure, automation and digitalization under the sagarmala project have witnessed a significant improvement. Long way to go but the trajectory is there. Multi-modal structure, dedicated freight corridors will gain traction in the next few years. Significant improvement in connectivity is expected as there would be a shift towards railways and water modes,” says Sai Krishna, AVP & Sector Head, ICRA Ltd.

Industry expects the regulations go stringent and companies that will invest in sustainable practices will reap better outcomes. China plus one strategy is fine but we should be careful about lapping up the manufacturing of those chemicals that China is shutting down due to the environmental issues. The opportunities should be weighed on carefully with regards to long term compliances,” concludes Krishna.