Prasenjit Chakraborty

India exports a substantial quantity of chemicals to the EU and the US. However, companies have realised that depending on any particular region or market could be a risky proposition. Hence, the Indian chemical industry is looking beyond these nations, especially when the demand from Asia and Latin American countries has been growing steadily.

According to American Chemical Council (ACC), Bric & T (Brazil, Russia, India, China & Turkey) region is expected to be the main growth driver for the global industry propelling demand from end-user industries such as construction, automobiles and consumer durables. According to its estimates, the BRIC & T region is expected to witness 7.6 percent growth in 2011 and 2012, while developed regions such as the US, UK and Japan will report an average growth of 3.3 percent between 2010 and 2012.

New overseas potential

As far as chemicals export is concerned, the question that arises is why India is concentrating more on the EU and the US. “It is because volume is more in these countries. Germany alone consumes a substantial amount of chemicals from India,” said Satish Wagh, Chairman, Chemexil.

However, looking at the prospects in other markets, the Indian chemical industry has started looking beyond the traditional markets. This definitely augurs well for the industry as well as the country. “We are presently focussing on Asian countries too. If things go in the right direction, we are planning to export our products to countries like Vietnam, Thailand, etc. Of late, Indian manufacturers have understood that they should have large capacities and only then will be competitive in the international market. They are going for massive expansions and I am sure the Indian chemical industry will grow manifolds in the years to come,” said Wagh.

It is not that India has a strong foothold only in the EU and the US markets. India also sells chemicals to Latin American countries. But due to longer credit periods, India is not fully able to capitalise on the potential of these markets. “India has presence in this region, but companies are reluctant to sell chemicals because credit period is 180 days and above. However, nowadays, as the Export Credit Guarantee Corporation (ECGC) helps, people have started exporting to the region again,” he said. According to Wagh, the total chemical exports (organic, inorganic, toiletry, pesticides etc.) from India is worth Rs 43,000 crore.

Meeting global standards

Chemical exports from India have been facing tremendous challenges after the EU implemented Reach (Registration, Evaluation, Authorisation & Restriction of Chemicals) legislation. However, Indian companies are putting best efforts to meet all the norms of the Reach. Experts believe that now onwards chemical export is not going to be smooth. “Even Latin American countries are also asking now for technical details and registration of products etc,” said Wagh. It is now almost clear that no country will allow selling products from other countries easily.

So, the issue here is market access against the backdrop of regulations. To facilitate this, the Government of India has come up with Market Access Initiative (Mai) scheme. “Under the Mai scheme, the government is providing around 25 lakh for each company to file registration of their products. But the scheme is restricted to the SME sector. However, considering the fact that big companies contribute majorly towards exports, the government should extend the Mai scheme to large-scale sector also,” said Wagh. In the ultimate analysis, success will depend on the individual strength and pragmatic steps adopted by companies.

Source: Chemical World