Gujarat’s petrochemical industry is seen making smart growth as the Western State of India holds lion’s share in the total production of the country’s petroleum production.
A recent report by the industry body, Association of Chambers of Commerce and Industry of India (ASSOCHAM) & PricewaterhouseCoopers (PwC) noted that the State will witness a robust growth in petroleum production in coming years with its share in the country’s total production rising from the current 62% to over 75%. Further the report also noted that the State will export 15% of the total Chemicals produced in the country.
Gujarat accounts for more than 51% of Indian production of major chemicals and it has eight Chemical Product Clusters, which are identified at Vadodara, Bharuch, Ahmedabad, Bhavnagar, Jamnagar, Mehsana, Anand, Valsad.
The State has a total capacity of 1180 KTPA (Kilo Tonnes Per Annum) for chemicals production and it has the highest share of polymer capacities in the country. The major driver for the state has been the availability of feedstock, with 1230 KT/A of Ethylene capacity & 1475 KT/A of propylene capacity.
ASSOCHAM maintained that the key concerns of the Indian Chemical Industry are small capacity of plants, higher input costs of raw materials, power, fuel etc and lack of world class infrastructure facilities specially roads, ports and power supply, lack of competitiveness, cost disadvantage and also stringent labour laws.
Expressing concerns about the various free trade agreements, which India is signing with other countries to phase-out trade barriers, the industry body maintained that unless the labour laws, power supply and infrastructure are improved, it would be very difficult to compete globally with rapidly declining duty differentials and appreciation in the value of rupee.
ASSOCHAM paper also emphasized for the strategies to be more focused on core competencies including innovations, which are increasingly becoming an important factor to become a leading player in specialty products.
Also, the trade body demanded to improve production processes and products by investing resources in technology development. Technological development may be achieved by the chemical industry at two levels. In addition, the industry needs to invest in technological resources that would lead to specialized product development, the report noted.
Indian chemical industry has a good record of management expertise. This could be further leveraged with techniques such as Good Manufacturing Practices, Good Laboratory Practices, Total Quality Management, Total Production Management and Risk Management.
According to the report, Indian chemical industry needs to focus on R&D in one or multiple areas. The basic chemical sector should focus on process innovation and product development and strengthen their competitiveness through improvements based on performance and quality of products.
Firms in knowledge based chemical sector should focus on R&D with the objective of achieving product leadership and process innovations. The petrochemical sector should focus on application R&D, as new applications have to be identified to increase use and application of polymers.
The chemical industry needs to enhance their collaborative efforts in order to improve competitiveness. Collaboration amongst players in the chemical industry could happen both at cluster level (for sharing of common infrastructure) as also at firm level (for sharing of knowledge and technology).
Collaboration with firms across borders for technology and investment would also give a boost to the industry. In addition, the players should also achieve greater levels of industry-institutional partnership for knowledge development and sharing.
Addressing the need of the IT applications in the industrial activities, ASSOCHAM report noted that chemical firms in India can gain a lot by making their manufacturing process IT-enabled. Information Technology (IT) can bring a good change in entire process cycle from technology, engineering and procurement to manufacturing by integrating them with business processes in all these areas.
This will eventually result in higher efficiency for the industry. Increasing use of IT to transact business will also help the sector, as most of the products in the chemical sector are commoditised.
For transforming ideas into new products, partnership between industry and academia is a must. Thus, Indian chemical industry should leverage the potential of educational and research institutions to source intellectual as well as human capital. Such linkages may be effectively used for setting up of in-house R&D facility or for outsourcing R&D activities, the report said.