PIB Press Releases

An interactive session between Minister for Chemicals & Fertilizers, Shri S.S.Dhindsa and representatives of industries of chemical, petrochemical and pharmaceutical sectors will be held on November 8th, 2002 to deliberate on vital issues/problems concerning the industry, namely modernization, exports, infrastructure, Mega Chemical Industrial Estates & Patents.

In order to consolidate its position in the fast changing global market, the Indian Chemical Industry needs to modernise its processes and adopt the latest packaging technology. The Pesticide industry at present is characterized by over capacity, low capacity utilisation and low investments in R&D. In order to become competitive it needs to undertake modernisation programmes for cost effective production through improvisation in process technologies, production of eco-friendly formulations backward integration, upgradation of quality and adoption of ISO certifications. In the Chlor alkali industry, the plants operating with Mercury cell or the Diaphragm technology needs to switch to cleaner and more eco-friendly Membrane Cell Technology. Presently 70 per cent of the total installed capacity of caustic soda is based on Membrane Cell Technology.

In face of the changed scenario of globalisation, lowering tariff and non-tariff barriers and consolidation through mergers and acquisitions, the Petrochemical Industry, which includes Polymers, Synthetic Fibres and Elastomers, is required to take urgent measures to stay in the competition. Since the initiation of economic reforms, the Polymer Industry has upscaled and upgraded by setting up of mega size petrochemical complexes. However, the downstream plastic processing industry, with 15,000 plastic processing units of which 75 per cent are in small-scale sector, needs upscaling/upgradation to keep pace with the advancements in the upstream polymer industry. As regards the synthetic Fibre industry, which is fragmented, sub-optimal in size and equipped with out-dated technology, modernisation would require an investment of Rs. 8,500 crore. The Industry’s inclusion under Technology Upgradation Fund Scheme (TUFS) would also help.

Chemicals have been identified as a thrust area for increasing exports of the country. During 2001-02, India exported chemicals worth Rs,. 22,657 crores constituting around 11.5 per cent of India’s exports of all commodities.Presently,India’s share is 0.67 per cent of world exports and to reach 1 per cent of world exports of US$ 80.48 billion in next five years i.e. 2002-07, India needs a 11.9 per cent Compound Annual Growth Rate (CAGR). In view of the increasing competition from other countries including China, difficult market conditions due to recessionary trends, registration requirements in pesticides and non-tariff barriers, the Industry has to be globally competitive not only for its growth but for its very survival. Since a large number of units are in small and medium sector, the industry and trade Associations should set up e-platforms to enable access of foreign enquiries to members and work in close cooperation with Indian Missions abroad for obtaining registration of their products in other countries.

In Pharmaceuticals, India ranks 4^th worldwide, accounting for 8 per cent of world’s production by volume and 1.5 per cent by value. India ranks 17^th in terms of export value of bulk actives and dosage forms and exports to more than 200 countries of which 40 per cent goes to highly developed western countries. The exports of Drugs, Pharmaceuticals and Fine Chemicals have been showing an excellent growth rate as indicated by the following figures:-

Year	1998-99	1999-2000	2000-2001	2001-2002
Value (Rs.crore)	6256	7230	8757	9751 (Prov.)
Growth rates (%)	15.54	15.57	20.73	11

However, the industry has to gear up to compete with countries like China and Brazil to be able to maintain the double-digit export growth rate.

The Chemical & Petrochemical Industry has been constrained by poor infrastructure like inadequate port facilities, roads, power, communication, etc. which has resulted in higher cost of production. With a view to enhance competitiveness of the industry, creation of specialized and captive infrastructure is essential and would require similar incentives as applicable for public utility infrastructure. The high cost of power in India significantly reduces the competitiveness vis-à-vis competing Asian nations. The petrochemical & Chemical companies should be allowed to set up captive power plants beyond their requirements and also allowed to sell surplus power.

The Chemical industry, by its very nature requires specialized infrastructure on account of a number of issues including quality of effluents, waste disposal and impact on the human health and environment. In view of this, there is a worldwide movement towards creation of specialised estates. Such estates have come up in Singapore, Middle East, Germany and China. Besides, smaller estates have been set up in Thailand, Philippines, Malaysia, Canada and USA. The idea of setting up of port-based Mega Chemical complex in one or more states with the help of foreign investments and support of the Indian industry could be pursued in this regard. While the Government would support the creation of state- of- the- art infrastructure for the chemicals industry, the initiative for creation of such an estate would have to come from the industry.

In the Chemical industry, agrochemicals, dyes and speciality chemicals would feel the impact of new patent regime. While India has tremendous capabilities in process chemistry, there is not much of basic research by the industry. Consequently, in the post 2005 scenario, Indian market would see an inflow of new molecules from multinational companies. Domestic industry would have to meet this competition through development of new molecules, process and product development, development of new formulations and by better product customization. Almost 70 per cent of all agro-chemicals currently in use in the country are off patent. In the new product patent regime, in which MNCs are expected to bring in new molecules, the Indian Agrochemical Industry would need to focus on technology development for bio and botanical pesticides.

In order to enable the Petrochemical Industry, to align with the developed world the major areas of R&D focus would be on tailor made Polymers for improved performance, new plastic processed articles/recycling value added speciality Polymers/ Fibers/Yarns, reducing consumption of raw materials/catalyst, improvement in existing processes/quality and energy conservation. In the Pharmaceutical sector, India’s R&D forte has been in synthetic organic chemistry and process development. To retain its competitive edge in the post 2005 global market, it is imperative that the Indian pharma industry intensifies its efforts towards novel drugs and delivery systems, supported with appropriate fiscal incentives.