By Nachiket Kelkar, CNBC-TV18   

The Chinese government's decision to restrict movement of hazardous chemicals in the run up to the Olympics has led to an escalation in bulk drugs and chemicals prices in India.

India imports nearly 50 % of its basic and intermediate chemical requirements from China. The Chinese government's decision to clamp down transportation of hazardous chemicals due to the Olympics, has led to an upward spiral in most bulk drugs and chemicals prices to the extent of 30-300 %. Many of these chemicals are key ingredients in pharmaceutical products.

For instance, the price of Paracetamol, has doubled from Rs 40 to nearly Rs 85 per kg in the last one month. Similarly, acetic acid prices have gone up from Rs 30 to Rs 44 and sodium nitrate and nitrite prices have gone up nearly 300 % from Rs 25 to Rs 70 per kilo.

“At the moment, it has become zero availability. We are overdependent on China,” said Yogin Majmudar, MD, Bakul Pharma.

Some other multinational companies like Dow Chemicals have also raised their chemical prices due to the rising crude oil prices and the increasing costs.

“We are kind of held hostage to price of feedstocks. So, be it construction products or cooling products, these are all based on Naftha primarily. We are essentially passing through these costs. Add to that freight costs,” said Ramesh Ramachandran, Dow Chemicals.

Be it Olympics or be it inflation, critics say this price rise is bound to have an adverse impact on export of Indian chemicals and production could shift to countries like Taiwan and Korea, if prices continue to climb.