Page 133 - CW E-Magazine (15-7-2025)

Point of View

What Maharashtra needs to do to get back its chemicals

manufacturing mojo

Maharashtra was for many years the leading hub for chemicals production in India, but over the last two decades it has ceded this
position to Gujarat. Nevertheless, Maharashtra still ranks above other centres including Andhra Pradesh/Telangana, Tamilnadu, Karnataka,
Odisha and West Bengal – all coastal states well suited for chemicals production.

At a recent conference organised by ASSOCHAM, an industry lobby group, measures to boost chemical investments in Maharashtra –
be it new projects or expansions – were made by industry representatives and experts. Their pleas centred around making available
suitable land with appropriate infrastructure for new projects; ensure access to basic feedstocks through a cluster-based approach;
improving the ease of doing business by rationalising archaic rules and regulations; and speeding up the approvals process for expansions
and/or diversifications of product slates.

Well-placed on the basics
Maharashtra has always had good ‘soft’ infrastructure for industrial manufacturing, including for chemicals. It has good quality
manpower from several reputed engineering and science colleges; and easy access to financial markets thanks to Mumbai. It also ranks
reasonably well when it comes to ‘hard’ infrastructure: reasonable availability of power (albeit at higher cost); and decent port, road and
rail networks. Significantly for the chemical industry, two refineries in Mumbai provide feedstock (and fuels) and were enablers of the
first lot of chemical projects. These included a large (by the standards of the times) integrated petrochemicals project of NOCIL, centred
around a naphtha cracker (with the feedstock coming by pipeline); and a fertiliser plant of Rashtriya Chemicals and Fertilisers (RCF).
A significant milestone in the development of the chemical industry in the State was the setting up of the Maharashtra Gas Cracker
Complex at Nagothane by Indian Petrochemicals Corporation Ltd., which had earlier set up a naphtha-based cracker at Vadodara in Gujarat.
The feedstock for the second cracker was the C2/C3 fraction of the natural gas unearthed in the Bombay High offshore oil and gas fields
and making landfall in Uran in the outskirts of Mumbai.

Investments were also catalysed by the creation of several industrial estates by the Maharashtra Industrial Development Corporation
(MIDC), the nodal agency. Those at Ambernath, Dombivili, Kalyan, Kurkumbh, Lote, Mahad, Roha, and Tarapur were designated for chemicals
manufacturing.

Gujarat moves ahead
While Maharashtra and Gujarat remained neck to neck in chemical investments till the turn of the century, the latter has since stolen
a march. This is largely for two reasons.

Firstly, was the clear identification of chemicals as a focus area by the Gujarat government, and the creation of several industrial hubs –
away from population clusters but not too far from the cities of Surat, Vadodara and Ahmedabad. This author remembers a well-attended
investor meet organised by the State’s investment promotion agency, the Industrial Extension Bureau, in the early 1990s to highlight
opportunities in manufacturing several bulk and fine chemicals. Over time, the comfort of the State bureaucracy with the chemical industry
grew, and the welcoming attitude led to significant investments, and creation of new chemical estates, of which Dahej is probably the
most important in the country today. This is in contrast to Maharashtra, where the chemical industry is viewed with suspicion and made
to feel unwelcome.

The economic benefits of clustering also catalysed the rapid development of Gujarat’s chemical industry. This industry is unique in
the long value chains it supports, and companies like to be where their customers and/or raw material suppliers are. While none of the
industrial clusters in Gujarat came up following a masterplan prepared by the State (save Dahej), private investors took matters into the
own hand and located near one another.
The commissioning of two large refineries in the private sector – aggregating to a massive crude oil processing capacity of about
88-mtpa at Jamnagar – in addition to one in the public sector (18-mtpa), was also a factor.
As pointed out earlier, Maharashtra is still a leading hub for chemicals. According to a report by Ernst & Young, a consultancy, the State

Chemical Weekly July 15, 2025 133

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