India’s chemical exports will double in 18 months

While the chemical industry has been known for its cost competitiveness and high quality, it has been a laggard in the export market, which is dominated by European and Chinese players.

Out of the $108 billion chemicals export market, India’s share is merely $24 billion and this is what Satish Wagh, the newly appointed chairman of Chemexcil, wants to change. Being part of an initiative of the Ministry of Commerce and Industry, Chemexcil is one of the largest chemical manufacturers associations in the country.

In a chat with DNA, Wagh talks about the industry, the fading Chinese dominance, the implications of the recent Registration, Evaluation, Authorisation and Restriction of Chemical substances (REACH) legislation on Indian players among other things. Excerpts:

As the chairman of Chemexcil, what is your agenda going forward?
My single-point agenda will be to promote the country’s exports. Frankly, today the chemical industry has got a good advantage, as the United States and the entire European Union are increasingly looking at India as a prospective country to buy chemical products.

Earlier, China was a preferred destination owing to its huge manufacturing capacity and aggressive promotion. But in the long run, countries are slowly realising that Indian products have better quality.

Was the China factor the only reason for India to lag in exports or are there some more factors too?
Another reason is constraints on capacity. While the Chinese have been the biggest exporter from Asia, the reason behind their aggressive exports was their huge capacity. After domestic consumption, they had to look at overseas territories to exhaust their huge production.

Therefore, for Indian exports to rise, first our capacities too should rise. Thankfully, now there is widespread awareness among manufacturers that if they want to survive in the long run, exports is the only way out and for that they have to increase their production capacity tremendously. Several companies are doubling and tripling their capacities.

This, coupled with the high quality standards in India, will act in our favour.

Have you set any export targets?
The commerce ministry has a target to double exports from the chemical industry in the next three years. But I am confident that with concerted efforts, we will be able to surpass the target comfortably and  double our exports in the next one-year-and-a-half.

How have exports grown in the last few years?
Last year (FY2009-10), exports from the Indian chemical industry grew 5%. But this year, since the chemicals exported from India and others to the European Union came under a strict scrutiny due to the REACH legislation, exports may be a little muted. But I am happy that the government, in a very short time, took measures to meet the REACH norms and is also offering concessional rates for pre-registration and registration for companies that come under the REACH legislation. The first phase of this registration is over and the next phase will begin shortly. So I am confident that in the coming years our exports will grow faster and we will do better.

Which are the other areas where the chemical industry requires some help?
There are several other issues such as lack of infrastructure and skilled workforce. But now our Prime Minister and the chairman of the Planning Commission, Montek Singh Ahluwalia, have already constituted a taskforce to look into the cracks in the chemical industry and the issues that require urgent attention. The task force will be submitting its report in the next three months and I believe it will look into these important issues of infrastructure, trained manpower etc.

Has Chemexcil made any recommendations to the government to boost growth?
See, another problem with the chemical industry is that it is very cluttered and unorganised. There are several small companies scattered across the country. So what we want is that the government should come up with guidelines to set up chemical parks in every state, where all these companies will come together under one roof. We have already submitted our request and the proposal will be taken up by the government in the next two months.

Our idea is to make these chemical parks as manufacturing hubs, where all required infrastructure will be provided to large- and small-scale companies.

These chemical parks are much on the lines of PCPIRs, which the government had proposed to set up. But PCPIRs have been a slow starter and so far not much progress has been made. Don’t you think the chemical parks will also go the same way?
Yes, the chemical parks will be more or less similar, but the idea behind them is to bring together the scattered industry under one roof, where all facilities are made available to the players.
PCPIRs (Petroleum, Chemicals and Petrochemical Investment Region) are an initiative of the central government and we need equal support from the state governments also to take them forward, which was lacking earlier.

For the chemical parks, we have not only submitted our proposal to the commerce ministry, but have also garnered support from the chemical and fertiliser ministry as well, so we there will be more focused efforts.