COVID-19: Change, Challenge & Healing Solutions for the Indian Chemical Industry
India needs to fast-track its plans to be a self-sufficient nation with regard to chemicals, as it is important to bridge the gap to cut down foreign dependence for essential raw materials
As the world reels from Covid-19 pandemic, industries across sectors have taken a severe hit. The ongoing global and nationwide lockdown has caused most businesses, barring essential goods, to come to a complete standstill. In India, important sectors, which are highly dependent on chemicals, like automobiles, pharmaceuticals, electronics, are facing a shortage of raw materials and essential components.
The Chemical & Petrochemical Industry has been among Hubei's pillar industries and India has a high import dependence on the region. The impact of the China lockdown is complex since we compete with China in some areas, whereas are dependent on them for raw materials in others. In the short term, the shutdown of Hubei factories has led to a shortage of chemical raw materials to importers dependent on China leaving a void in the supply chain in India which is likely to have a cascading impact on a wide variety of industries in India.
Due to the Chinese supply-chain dependency it is expected that real manufacturing GVA will decline by 5% in FY21. It is expected that this would result in an approximate loss of about $31 billion in value-added for the manufacturing sector during the coming year. India needs to fast-track its plans to be a self-sufficient nation with regard to chemicals, as it is important to bridge the gap to cut down foreign dependence for essential raw materials. This, naturally, would also bring a wide range of opportunities for domestic manufacturers to explore.
Considering such situations, diversification of supply chain is an important step to mitigate such risks in the future. A well thought Foreign Trade Policy (FTP) will help enhance India’s trade share globally. There is no better time than now for the government to start creating concrete domestic and foreign policy to facilitate industry to invest in India’s chemical self-reliance.
Author: Anand Srinivasan, Managing Director, Covestro India
DISCLAIMER: The views expressed are solely of the author and Indian Chemical News does not necessarily subscribe to it.