Page 128 - CW E-Magazine (22-7-2025)

Point of View

similar idea was floated earlier, it was deemed prudent to support chemicals that can underpin profitable value chains particularly in areas
deemed strategic from a national perspective, such as inputs to agrochemicals and pharmaceuticals. Subsequently, some bulk chemicals
crept into the list.

The report again moots similar product selection spanning agrochemical intermediates (Group 1), pharmaceutical intermediates (Group 2),
battery & electronic chemicals (Group 3), dyes & pigments (Group 4), petrochemicals (Group 5), and multiple use chemicals (Group 6).
The recommendation is for staged incentives for incremental sales for a period of five years starting with 10% for Year 1 to 6% in Year 5.

While the list of chemicals that India imports in significant quantities, and those in which single country dependence is large, is a good
place to start looking for projects to support, a careful scrutiny of competitiveness must also be made in parallel. There are some in which
support in the early stages can surely benefit, while in others inherent competitiveness will be so poor that removing the crutch of support
will render the project unviable. Supporting the latter is akin to throwing money down the drain.

Chemical hubs
The need for world-class chemical hubs as destinations for integrated chemical manufacturing has been talked about ad nauseum
for more than three decades with little to show for it. Mooted in 2007, the Petroleum, Chemicals and Petrochemicals Investment Regions
(PCPIRs) were to be on par with the well-known Chemical Parks in Singapore, China, Western Europe and the US Gulf Coast, and attract
(as the name suggests) refiners, petrochemical plants as well as downstream investments in fine and speciality chemicals. Save for Dahej,
which too came about by amalgamating a number of existing units under its banner, limited progress has been made in others. This is a
colossal failure not of concept and structure, but of on-ground implementation.

The concept is very much still valid and even more vital today if India’s chemical growth ambitions are to be realised. The existing
chemical clusters – most of which have come up in an unplanned manner – cannot accommodate a doubling of India’s chemical industry
as expected by 2030, let alone a quadrupling by 2040. Safe, efficient and sustainable chemical manufacture will need the creation of several
new clusters – preferably in every coastal State – with product choices dictated, among other factors, by the specifics of the region.

Niti Aayog is mooting the creation of a chemical fund in a Special Purpose Vehicle (SPV) or other financial model (including equity/debt
financing),with States to support land acquisition (which has been a challenge).It has rightly pointed out that the first focus should be on
the hubs in Gujarat, Odisha and Andhra Pradesh, where progress has been made in attracting anchor tenants, before moving onto new
clusters in Maharashtra, Karnataka, West Bengal, and Kerala.

R&D and technology investments
The Niti Aayog report has also called the creation of an R&D fund by a dedicated agency to develop technologies for new products, in
sustainable & green chemistry, and for those chemicals in which lack of technology access is inhibiting investments. These are to be done
under public-private partnership, with clear deliverables and milestones to be agreed upon by both academic institutions and industry players.

There can be no arguing with such support, but the plain fact is that India’s history of collaborative efforts has been very poor, in
sharp contrast to China where industry and research institutes have worked in close partnership in developing cutting edge processes for
several bulk and fine chemicals. If the renewed efforts in India are to bear fruit, a diligent monitoring and evaluation system will need to be
established to continuously assess progress and outcomes.
There is also an urgent need for translational research centres that scale-up laboratory scale technologies to demonstration levels – the
so-called ‘valley of death.’ In chemicals, one has been created at the CSIR-National Chemical Laboratory, and another is planned for by the
Institute of Chemical Technology. This is a start.

Some technologies are still closely held by MNCs, and joint ventures will be faster route to access them. India’s past record in luring
MNCs with the promise of a large and growing market has been disappointing so far, but the geopolitical dynamics now at play afford
another chance that India cannot afford to miss.

By focusing on building world-class chemical hubs, streamlining regulatory processes, supporting R&D and innovation, and nurturing
a future-ready workforce, India can hope to scale its chemical industry several-fold. This is important given the chemical industry’s role as
a great enabler of modern life as we know it.
Ravi Raghavan

128 Chemical Weekly July 22, 2025

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