Gujarat dye industry faces Chinese rivalry

The local dye manufacturing industry has gone for a toss. The industry is in trouble owing to pollution related problems.

Also, a huge gap in demand and supply, which happened after China started importing the main raw material called H-acid from India, is causing the industry much pain.

According to Sailesh Patwari, former president, Gujarat Dyestuff Manufacturers Association (GDMA) and chairman of Naroda Enviro Project (NEPL), "China has started buying H-acid at the rate of about 70 tonne per month from India, which it used to dump earlier. The reason is that the manufacturers there are facing huge problems from their local pollution regulatory authorities. So, they have reduced their production to one third. This has resulted in a big demand-supply gap in the market."

The Chinese are importing H-acid at the cost of around $5.2 per kg, said Patwari. He further added that the same Chinese were dumping H-acid into the Indian market couple of years back. They used to dump at half the price, at around $2.5 per kg, when their total output was around 7,000 tonne per month.

The Chinese production of H-acid has gone down from a peak 7,000-tonne per month, to around 1,500 per month now, said Patwari, which has compelled the Chinese to import it from India.

The Indian market on the other hand is facing a peculiar problem. The Chinese dumping has forced many local manufacturers to close their units. Currently, India's total H-acid demand comes to around 4,000 tonne per month against that of total production of around 2,000 tonne per month.

The total production capacity is catering to both the domestic demand as well as the demand from China. However, the domestic consumers of H-acid have an upper hand. Their end product dyes are fetching good prices.

So, despite offering a good price, the Chinese may not get the amount of H-Acid that they want from the Indian manufacturers said Patwari.

According to the president of GDMA, Griven Kharawala,"Currently, the production level in the state has gone down. As against the rising demand, supply has decreased due to the rise in prices of raw materials."

The price of H-acid, which costs somewhere around Rs 150-175 per kg, has gone up to Rs 260-275 per kg in just one month. The prices of other chemicals too have increased. Napthaline, used for preparation of dyes and intermediates, was Rs 32, which has in six months gone up to Rs 54.

Out of the total number of small-scale dyestuff manufacturers (SSDM) in Gujarat, 30 per cent are on the verge of closure, while 50 per cent are working with hardly 30-40 per cent of the installed capacity.