Ensure self-reliance, reduce chemical product imports: Secy Tejveer Singh to industry

India's Chemicals and Petrochemicals Secretary Tejveer Singh urged the industry to become self-reliant amid global supply disruptions, citing high imports and a rising trade deficit as major concerns.

Chemicals and Petrochemicals Secretary Tejveer Singh on Thursday expressed concern over high imports of chemical products and asked the industry to become self-reliant amid global supply disruptions.

Addressing the 'India Speciality Chemicals Conclave' organised by industry body Assocham, Singh said the government has taken various steps to deal with this crisis and assured the industry representatives that it is open to more suggestions.

He also stressed the need for collaboration between the government and the industry to prepare a strategic roadmap to achieve the USD 1 trillion market size of India's chemical sector.

The secretary said the government is formulating a new scheme to strengthen the domestic chemical and petrochemical manufacturing ecosystem. Three chemical parks with a total outlay of Rs 3,000 crore are also proposed.

Listing out ''headwinds' for the sector, Singh said, ''The first, I think of course, is high imports and the rising trade deficit''.

''Generally speaking, this sector accounts for the second-largest big-ticket import bill after the petroleum sector, and our trade deficit has grown significantly since the turn of the century. And therefore, it needs no kind of reiteration that this is one of our major concerns as a country,'' Singh said.

He said the technological constraints and the low private investment in R&D (research and development) in the sector are the second major concern.

Speaking about the third challenge, Singh said, ''We are currently experiencing.

geopolitical challenges. The West Asia crisis has caused huge supply chain disruptions''.

''In an age of global uncertainty, it's important for this sector to be relatively more self-reliant. Maybe 100 per cent will be very difficult to achieve, as you all may agree, but definitely we need to become far more self-reliant than what we are today,'' he noted.

Stating that the West Asia crisis has created a huge challenge, the secretary said it is also a ''wake-up call'' for the need for greater import substitution to make this sector more self-reliant.

''It (conflict) has exposed the vulnerabilities in global supply chains and sometimes...for a war, which is not of our making, we are facing the negative externalities in a very big way,'' he said, adding that the central government has taken multiple measures.

The secretary mentioned that the fourth challenge is trade and tariff-related, which is dumping from competitor countries, and said there is a need for prompt action.

''The final one is really about a cleaner and greener industry. Today, the market is becoming far more differentiated, and there is always a premium on how clean and green you are, and therefore dependence on fossil fuels and moving to even cleaner energy sources is important now,'' Singh said.

Referring to industry's demand from the government, the secretary said it wants a strategic roadmap for the sector and stability in policy, which is ''a fair expectation''.

Singh emphasised that the government and industry need to collectively draw a roadmap, eliciting long-term and intermediate goals.

After the roadmap, he said, there could be a need for the creation of the right incentive structures for fostering private investment.

Singh said the government has introduced the chemical parks scheme to enhance domestic chemical production and reduce import dependency.

''We will launch a scheme to support states in establishing three dedicated chemical parks through a challenge route on a cluster-based plug-and-play model,'' he said.

He said the department is in the process of formulating a new scheme to strengthen this domestic chemical and petrochemical manufacturing ecosystem.

''So, we propose to have three dedicated chemical parks, each with a minimum area of around eight square kilometres....The scheme will have an overall outlay of about Rs 3,000 crore, with each of the parks being given Rs 1,000 crore each, spread over a five-year period,'' the secretary said.

Singh said his department is also closely in touch with the Department of Science and Technology to see how projects under the chemical sector can be supported for R&D under the Research, Development, and Innovation Fund, approved for the Department of Science and Technology.

Before concluding his speech, the secretary asked the department to provide accurate production data on a timely and regular basis.

Sagar Kaushik, Chairman of Assocham National Council on Chemicals & Petrochemicals, said, ''A great journey to reposition the petrochemicals, including the speciality chemicals sector, is underway to achieve the targeted USD 1 trillion in output by 2040. The journey will require unprecedented levels of capacity creation because we have a growing captive demand, and we risk a growing import basket if we fail to service the demand''.

The industry needs a level playing field to unlock our potential to meet growing demands, he added.

Nilesh A Kulkarni, Co-Chairman of the council, said, ''In 2025, our domestic trajectory remained very resilient. India's chemical market was expanding towards a projected USD 250 to 300 billion milestone by 2030. The West Asia crisis has shown us that we are in the midst of margin compressions because there is destocking, there is capacity dumping from China and other countries''.