‘We should increasingly work with China in the field of chemicals’

India has always been burdened with stringent policies from Europe whenever chemical exports were concerned. In a chat with DNA, S Ganesan, chairman, International Treaties Export Committee, Indian Chemical Council (ICC), talks about the high-handedness of Europe, the robust domestic chemical industry and the way out for India in the international arena. Excerpts:

Can you give me a picture of the chemical industry worldwide?
If you look at the world trade, the total size of traded commodities is $16 trillion. Now out of this, the largest traded commodity is petroleum products. And the second largest, surprisingly is, chemicals — with a size of $1,447 billion, which is about 9% of the total world trade. So the point to note here is the second largest traded commodity in the world is chemicals and not food and food products, which is almost $300 billion less than chemicals, which is a huge difference.

Now the leaders are the European nations with a massive share of $860 billion, and that too, concentrated in a handful of European Union (EU) nations. Now these few countries command nearly 60% of the total share.

That is why all policies are framed and enforced by Europe in the chemicals market worldwide. They will promote a chemical if it is profitable for them and the moment they realise it is no more profitable, they will ban it. This is what impacts the markets here in India, because it is not the chemicals which is affected but the entire value chain. Europe has the expertise in mastering policy advocacy through global forums.

But Europe is also one of the leaders in innovation in the chemical industry?
It is only generic chemicals which has ever come under attack on the grounds of environment. No patented chemicals have ever come under attack because all patented chemicals are held by Europe.

I am not saying Europe is not a leader in innovation, they are. And India has never patented a single chemical and will never be able to do so. Our strength is not to discover but to improve, to innovate.

If somebody is making it at $10 we will make it at $3. 95% of our knowledge is borrowed knowledge. But what I am asking is why is it only when the chemical is off-patent and becomes generic, then its environmental hazards come to the fore?

But there are actually some chemicals which are detrimental to the environment.

In Europe, chemical policies are often given a new dress to save the environment so that the critics are silenced. Nobody actually does a thorough study in countries like India and China to find out whether are they really detrimental to the environment. Tell me one Indian Institute of Technology (IIT) which has come out with a policy paper on chemicals. On the other hand, Europe has the backing of international forums.

Take for instance, the United Nations Environment Programme, or the UNEP. Although it’s a UN wing, 82% of their funding comes from European nations. And most chemicals which are unprofitable generic chemicals in Europe are eliminated through the UNEP route. So while the world looks at it as a UN body that has brought in the policy, the strings are pulled by Europe.

So you mean to say the problem is the high-handedness of Europe.
The problem is the issue of mother earth. In the name of protecting the environment, most of the policies are passed and pressed on us without really understanding its impact.

Look at India, in the name of saving the environment and saving electricity, the youth of this nation will take candles in hands and march on the roads, they will say on this day we will switch off electricity for one hour. But the same people start complaining when there is a power cut for one hour.

Why? It’s because when they switch it off in the name of saving the environment, it gives them an excellent elation, feeling of bliss, as if they are actually doing their bit to save the earth. This is stupidity. One should stand up for the right reasons. You will never see these youth fighting for a chemical being unnecessarily banned from exports.

So how is the export market and are we really being hit because of European regulations?
There is a phenomenal increase in total exports from India from $178 billion in 2008-09 to $234 billion in 2009-10 and out of this the export of chemicals from India stands at $24 billion. So whether it is international economy or national economy, chemicals play a very important role in earning revenues. And these regulations, which are forced upon us, hit our country quite hard.

So what is the solution to this problem?
See, as I said, our knowledge in science and technology is borrowed knowledge. We are masters in improving overall cost structures, we are masters in improving the technology but to move one step ahead of them, it will definitely take us some time. But what we need to do is to get up and make our voices heard and put forth the right picture.

The industry has to work with the institutions and policy makers and fellow developing countries to put forth what we need and why we need, and what is right and wrong for us. I strongly recommend that we should work more and more with China in the field of chemicals, especially because both of us have equal interest in generic chemicals and both have huge domestic market. So technically, these two countries should take a call on policies.

What else could be done to make our presence felt?
We have to question the quality of European products, which we never do. They have implemented the REACH regulations on us whose impact is going to be terrible.

Are we doing the same thing that they are doing to us? Are we testing the chemical products that we are importing from Europe? No we are not.