Indian chemical industry poised to grow, if concerns addressed: LANXESS

LANXESS, the leading specialty chemicals company and the global market leader in synthetic rubber expressed its commitment to grow in the Indian chemical industry at the seminar on chemical and petrochemical industry on February 8 at Hotel Le Meridian in New Delhi. While addressing the august audience on the topic ‘Investments in the chemical industry and factors imperative for its sustained growth’, Dr. Joerg Strassburger, Managing Director and Country Representative, LANXESS India assured that the Indian chemical industry, of which LANXESS is an integral part, holds immense potential and is poised for strong growth.

“In the backdrop of growth shifting from western markets to the Asia Pacific and favorably growing consumer driven industries in India like construction, automotive, tyre and agrochemicals, the country has the potential to build a USD 80 bn to USD 100 bn specialty chemical industry by 2020”, said Strassburger.

Based on this foresight, LANXESS has invested around €150mio (INR 1000cr approx.) in assets in the last three years. These include setting up a greenfield manufacturing site with several utility services at Jhagadia Chemical Park in Gujarat, acquisition and continuous upgradation of the assets of a manufacturing plant in Nagda in Madhya Pradesh and a brand new office building in Thane, near Mumbai, which serves as the head office for its operations in India.

The site in Jhagadia hosts world class manufacturing facilities for multiple business units like ion exchange resins, polyamide    compounds, rubber chemicals and lubricant oil additives and serves both the growing domestic market as well as customers in markets all across the world. The site in Nagda has plants for manufacturing of advanced industrial intermediates that are supplied to pharmaceuticals, paints and coatings, agrochemicals amongst others.

Strassburger is convinced that India holds a lot of promise for the chemical industry but not without some corrections that are imperative for its sustained growth. The challenges lie in the areas of infrastructure, manpower and support from the administration. “The availability of continuous power supply, availability of natural gas, connections to common sewage and effluent treatment plants from the sites, good connectivity to major industrial clusters by highways, ports and airports are some of the quintessential infrastructure requirements that the industry presently has”, Strassburger explained. “Since there are very few sustainable chemical parks in India, availability of land is scarce for companies to set up plants. On the raw materials front, higher cost and non-availability of feedstock is often a handicap for scaling up manufacturing operations”, he further added.

“LANXESS exports large volumes of finished goods from both of its manufacturing sites in India and we have realized that road transfer of finished goods from site to ports are expensive and often not safe. Inland container depots near manufacturing sites will prove to be of help, enabling transfer of goods by rail in a cost effective manner”, suggested Strassburger. One of the last points he mentioned was about the complex tax structures, lack of a single window clearance for necessary permits and approvals and rising manpower costs as some of the additional challenges that a growing chemical company in India has to deal with.

“The potential of the Indian chemical industry can be leveraged if the concerns are addressed. There is a projected increase of another 70 million middle class households propelling the end user industries and we can bank on a strong growing economy with a base of approx. USD 1.7 trillion”, concluded Strassburger optimistically