Page 134 - CW E-Magazine (15-7-2025)

Point of View

houses about 23% of all manufacturing units, employs about 300,000, and accounts for 17% of India’s chemical exports. Manufacturing
units span the breadth of the industry (bulk, fine and speciality chemicals) as also active pharmaceutical ingredients and agrochemicals.

So, what will it take to aid the revival of the industry here.

Develop clusters around a refinery-petrochemicals project
The development of dedicated clusters combining refining, petrochemicals, and downstream chemicals is paramount. Maharashtra has
lost more than a decade since plans for a mega-refinery of 60-mtpa was announced by a consortium involving the three public sector oil
marketing companies and two international giants from the Midde East’s oil producing countries. The plans have gotten nowhere, mired
in the contentious politics of the State, and the foreign investors seem to have lost interest and moved on to other projects (notably in
China). The latest thinking, revealed in off-the-cuff remarks by officials in the Centre and the State, is to go for two or three smaller refineries,
instead of large one. Either way, it is vital to get going. The catalytic effect that even a 20-mtpa refinery can have, especially when
configured in petrochemicals mode (as is the trend these days), will be substantial. It will make available vital raw materials – particularly
a range of olefins and aromatics – that can enable building of capacities in several chemical value chains. In almost all of these India’s
demand is well above domestic capacity, necessitating large imports.

It is also important that when these refineries are sited – ideally at a coastal location – adequate provision is made for locating down-
stream industries. Many of the business opportunities that exist may not be worth the while of the anchor unit, but will be eminently
suitable for third-party investors, some of whom could be SMEs. Such co-location will not only make for more efficient and competitive
operations, but much safer ones as large transfers of hazardous chemicals over long distances can be significantly reduced.

Chemical units operating in such clusters will also benefit from the availability of ready-to-use infrastructure – utilities, effluent
treatment, logistics, and safety systems – created either by the anchor unit or the State or a combination of both. This will free up resources
of project promoters for the ‘core’ project and speed up timelines for plant construction and commissioning.
Governments at the State and the Centre will do well to encourage partnerships between those who have feedstock and those that
can valorise them.

Revamping existing chemical clusters
One has only to look around the several industrial estates currently in Maharashtra to see the woeful state of the infrastructure in
most. The civic and waste management facilities (especially common effluent treatment plants) tell a story of neglect and poor planning.
The proliferation of residential clusters in close proximity to industrial sites – particularly evident around Mumbai – has compelled many
chemical units to relocate either on their own accord (as in the case of the Thane belt) or by government diktat (as in the case of the
Dombivli cluster). What has possibly helped in the decision to move are the high prices that the land vacated fetched when sold to real
estate developers. The consequence has been a hollowing out of chemical manufacturing in Maharashtra, with Gujarat being the main
beneficiary.
While the other chemical estates in Maharashtra – Roha, Mahad, Kurkumbh, etc. – face less urban encroachment, most are saturated.
Even expansion of capacity or diversification of product slate are curbed by rigid regulation. This regulatory over-reach must change, as
it serves no purpose, and erodes competitiveness of the units concerned.

The introduction of ‘Maitri 2.0’ as a statutory single-window system for project approvals by the Maharashtra government, is aimed
at removing friction from compliance and permissions, but as one attendee at the conference quipped, while there has been some
improvement in the approval process for setting up new units, much needs to be done to improve the ease of running existing ones. Recent
efforts to simplify rules and decriminalise violations that are civil in nature are welcome measures, but more needs to be done, and quickly.

Not too late
It is not too late for Maharashtra to make up for lost ground as an investment destination for chemical manufacture. It still has all of
the strengths that once made it a chemicals powerhouse – growing demand from high growth industrial sectors (automotives, coatings,
textiles, etc.), high quality manpower, and financial muscle. Planners in the State must recognise the value accretion the chemical
industry provides and must create an enabling policy environment in which the industry can thrive, while complying to science-based,
contemporary regulations.
Ravi Raghavan

134 Chemical Weekly July 15, 2025

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