The ongoing global recession is posing a unique threat to the Indian chemical industry as the companies are finding increased competition from global chemical suppliers who are turning in large numbers to tap the ‘still growing’ Indian markets. Prices of a broad range of basic chemicals including polymers, petrochemicals, and agro-chemicals have crashed 30 to 70 per cent in the last two months due to cheap imports, industry complains.
The chemical industry, which comprises over 9,500 companies, says that the government’s attempt to rejuvenate Indian economy can only worsen the situation as India is amongst the very few large markets that remain in its growth phase. The industry, which records an annual sales of over Rs 2,45,000 crore and export revenues worth Rs 75,000 crore, has called for urgent anti-dumping measures to create a level playing field for the domestic industry.
“India remains the only bright spot among the large economies. This has resulted in major chemical/petrochemical economies in this region (China, South Korea, Taiwan and West Asia) focusing on India as the only large consuming nation without deep structural weaknesses, with rock-bottom prices,” said R Parthasarathy, vice-president, Indian Chemical Council (ICC).
“With the external problems of various sick economies with huge surplus capacities in chemicals and “nowhere to go”, India is the obvious target and this has already started,” he added.
According to ICC, the problem is seriously aggravated by the prevailing import duty structure of the chemical industry that is between 5 per cent and 7.5 per cent. “This compares negatively against the higher duties ranging from 12-30 per cent in neighbouring countries which have strong chemical and polymer industries. Even developed countries like Japan, the US and the EU have higher duties. Hence the stabilisation of the Indian economy and demand boost will not help the chemical industry,” Parthasarathy explained.
While construction and consumption will go up, only the manufacturers from China, West Asia, South Korea, Taiwan and Asean will benefit. Indian money will be unintentionally supporting jobs and industry in these countries at the expense of Indian jobs, he said.
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The ICC, along with industry chambers like Ficci, has already approached the high-level official committee that is looking at the second stimulus package to present their case.
The industry feels that the government should take urgent measures to stop anti-dumping as normal anti-dumping procedures are time consuming.