Two reasons why India is reducing its dependence on imported chemical products

India is reducing its dependence on imported chemical products, especially from China, and producing them domestically.

There are two reasons for this shift away from import dependence. First, the novel coronavirus pneumonia disrupts the global supply chain, exposing the risk of over import, especially pharmaceutical ingredients and chemicals.

Second, at the time of the border dispute, India is strategically reducing its supply dependence on China.

Petroleum and other chemical products account for a large share of India's imports. Many of them come from China.

The Indian government has taken a number of policy measures to promote the production of domestic petrochemical products, raw materials and methanol, which is part of its so-called "self-reliance India" policy.

In order to support the domestic chemical industry, China has increased its internal facilities in a large number of raw materials and chemicals.

Production of methanol and ethanol in India

The government of India has taken key measures to increase the production of several chemical commodities, especially methanol. Methanol is very important to the production of formaldehyde, medicine, pesticide and dye.

The price of the chemical soared as Middle East manufacturers shut down methanol plants as covid-19 closed.

To reduce the cost increase, Gujarat chemical fertilizer and chemical company resumed methanol production seven years later, with a daily production capacity of 525 tons to inject supply into the market.

The state-owned Rashtriya chemical fertilizer company (RCF) also started producing methanol at Mumbai's plant, with a daily production of 242 tons, to balance supply and demand across the subcontinent. RCF has been importing methanol before.

Another chemical that increases domestic production is ethanol.

Because of the excess sugar supply, the government is encouraging sugar factories to turn sugar cane into ethanol production. India has set a goal of raising ethanol's share of gasoline to 10 per cent in the next two years to reduce the bill for fossil fuel imports.

In addition to promising to increase revenue for ethanol producers in September, the government also provided a total of RS 18.6 billion in soft loans to 349 sugar plants and 13 independent wineries.

The measures to increase the internal production facilities are only one of the ways to achieve self-reliance.

But what about dumping chemical products and raw materials? This affects the price of the product in the importing country and the profits of local manufacturers.

To avoid this, the Indian Trade Relief Administration recently proposed an anti-dumping duty on chemicals imported from China, Vietnam and Malaysia. Commodities that may be affected include polyethylene terephthalate (PET), aniline oil and choline chloride.

Self reliance in petrochemical products

Several oil and gas companies are exploring more downstream investment in India. Saudi Aramco has signed an agreement with Ratnagiri refinery and petrochemicals Co., Ltd. (rrpcl) to build a refinery and a petrochemical complex on the west coast.

Adani group also has a stake in chemical production and competes with reliance industries. The company is working with the Abu Dhabi National Oil Company (ADNOC) and BASF to establish a propane dehydrogenation plant in Gujarat, which is made from ADNOC.

However, the difficulty of land acquisition will become an obstacle to delay the construction and production of new petrochemical plants.

Another challenge is safety standards and environmental compliance. To do so, these projects must be based on international security standards.

Before the tough journey

As India adjusts its policies and investments, India's path to self-reliance is a long-term project.

Investment in the production and research and development of key APIs (68 per cent imported from China), antibiotics (90 per cent imported from China) and special chemicals needs to be increased.

Recently, China's tariff hike of 100% on agricultural intermediates and technical formulations will promote domestic production.

Article source: https://article-realm.com/article/Finance/11021-Two-reasons-why-India-is-reducing-its-dependence-on-imported-chemical-products.html