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Mumbai: BASF India Ltd, a subsidiary of the world’s largest chemical maker BASF SE, decided in April to invest more than 1,000 crore in a new factory in Gujarat to cater to the local market. The move surprised many, coming as it did amid slowing growth. BASF India chairman and managing director Prasad Chandran said in an interview that smart companies can always find opportunities to grow. Edited excerpts:

Multinational companies, especially those that focus on manufacturing, have been wary of making fresh investments in the country in the past couple of years citing policy paralysis, economic crisis and a hostile investment environment. What gave you the confidence to make a large investment?

Many people in the industry asked me the same question. We believe that the smarter way is to make use of opportunities that are available currently instead of waiting for an ideal atmosphere, which is purely relative and varies from market to market. We are making a 1,000 crore investment in a greenfield manufacturing project at Dahej (Gujarat) in this environment, in addition to continuing our several ongoing expansion plans.

So I think, my job is to make better use of the opportunities for our growth, and smart companies should be able to find opportunities in any environment, which varies from market to market and country to country. But the most important factor is to ensure your business model is sustainable, and if not, try to adapt to the requirements of the market by understanding it well.

Real growth for BASF in India has come only in the past few years though it has been present in the country for at least a century. Most of this growth came through acquisitions the parent made globally. Do you think the Indian entity could have done better previously?

The business in India has actually shown significant growth in the last eight to nine years supported by several organic opportunities as well as acquisitions. We are basically the manufacturer for the manufacturing sector. We have grown both organically as well through acquisitions. You can see our business actually doubled in the last five years, which is directly linked to the growth of the manufacturing sector in the country. Also, in general, it is not the acquisition and the legal merger of the entities that finally lead to the growth of the business. But it mostly depends on how successfully one should make use of the synergies of the acquired businesses.

Another bottleneck that the chemical industry faced in India in the past was that the country did not have a chemical policy, which is key to the growth and development of the sector. But, things are looking bright, especially with the country’s first chemical policy in place. BASF will remain focused in all key business segments, except oil and gas, that the global parent is engaged in, in India.

Are you happy with the national chemical policy in its current form?

Certainly, yes. One of the major recommendations that has come while making the policy is that the government should have a clear vision to make the building blocks or the basic resources available to the industry. This has been adequately addressed in the policy for taking the industry forward. The government has also identified the chemical industry as a very important one for the growth of the manufacturing sector in the country, besides recognizing the importance of research in the industry in India and for India.

Another big thing for the industry that was brought in the policy is a changed perception that the country needs the chemical industry. It also talks about environment safety measures, which should be formulated with the support of collective thought and not with some cut-and-paste method. The government accommodated most of the industry’s requirements and suggestions in the policy, and it is only a matter of implementing and enforcing them now.

What is the level of research in the chemical industry in India?

Disappointing. India needs to recognize the importance of research, especially in the field of chemistry, which is essential for taking the industry forward and to address the several unmet needs as well as emerging demands. We should also involve more young talents in the research process by rewarding them. The level of research in chemistry is disappointing because the country has almost lost the research culture, and since 1975 the country stopped making basic research and we never incentivise research. The good thing now is that the national chemical policy has emphasized the need for research, and we should get bright young people into research and rebuild the research climate here. The captains of industry and people in power should think about incentivising bright young people to bring them into basic research, because the young talents will look forward to rewards and this will only help involve them in serious long-term research. And if you ask me if there is one thing which can make a big difference in the industry in the next 10 years, that is research.

Where will the investment come from?

Certainly, it needs big investment, which should come from big corporates, including global companies, and Indian companies should also emerge serious players in the development process.

The country should confidently allow capital inflow and encourage large companies to come and invest in research, manufacturing and the related space. In fact, there is no reason to be negative on foreign investments as the country has already become powerful in terms of industrial capabilities and skill level. Also, it’s a large market which no company can ignore.

BASF is also planning to expand its research initiative, involving more young talent available in the country. We recently completed the merger of three group companies, and are now geared up for the next phase of expansion, which will involve a number or partnerships with user industries, and several social development initiatives to empower the masses in India, an important market for us.

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