Many Indian firms may not REACH in time; exports at stake

Many Indian firms may not REACH in time; exports at stake

Hyderabad: Several Indian firms are set to miss the 30 November deadline for pre-registering the chemicals they manufacture with the European Chemicals Agency (ECHA) and will therefore not be able to export these to the European Union (EU) starting 1 December.

At stake, according to the European Commission, are exports from India to EU member countries that were worth €2.78 billion (Rs15,260 crore then) in 2007.

“Quite a few companies will miss the pre-registration deadline. Despite attempts to raise awareness, everybody has been waiting for the last minute to take a call on pre-registration for REACH," said D.M. Wakankar, REACH expert from the chemicals industry body Indian Chemicals Council (ICC) which represents at least 350 companies that manufacture and export chemicals.

REACH stands for Registration, Evaluation and Authorization of Chemicals, the EU’s new regulatory regime which requires all chemical substances manufactured or imported into the EU to be pre-registered with ECHA.

This requires the submission of detailed technical information about such chemical substances traded so that authorities can verify if those are safe for humans and the environment.

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The deadline for registration, a process that requires laboratory testing, runs up to 2018 but only chemicals that have pre-registered by 30 November can be registered.

As on 21 November, the Union government’s Chemicals Export Promotion Council (Chemexcil) claimed to have completed pre-registration of at least 4,000 chemical substances exported by 175 Indian companies.

Although estimates differ, the numbers point to a significant gap.

In a January report on Indian chemicals industry, audit and consulting firm Ernst and Young estimated that at least 750 chemicals exporting firms in India would need to comply with REACH to be able to continue trading with European nations.

K. Rangarajan, a professor at the Indian Institute of Foreign Trade (IIFT), who has been tracking the evolution of REACH legislation, however, said there are at least 2,000 small-and-medium-sized Indian chemicals manufacturers who would need to comply with REACH regulations.

And Chemexcil estimates there are around 7,000 chemical substances that India exports, which need to be registered under REACH.

“By the deadline, we expect to complete pre-registration formalities for at least 6,000 ingredients exported by 200 companies," Chemexcil chairman Anand R. Ladsariya said.

In a 12 May story, Mint reported that Indian chemicals and pharmaceutical companies were unaware of the REACH legislation and were ill prepared to face the tough registration process, which started 1 June.

“Bigger companies may be able to comply in time but the smaller ones who did not know well in advance about REACH and who were not able to bear the burden of registration costs will die out," Rangarajan said.

According to REACH provisions, non-European firms have to go through a European representative to register.

“Bigger chemicals exporting companies do not go through us for the pre-registration; they will hire their own agents in Europe for the same," Ladsariya added, explaining that there would be more than the Chemexcil-assisted 200 companies that would meet the deadline.

ECHA has set up an online system REACH-IT for companies to submit pre-registration applications.

“As we knew REACH-IT would be flooded by companies scrambling to complete pre-registration at the last minute, we had set a 15 November deadline for ourselves. But we were unable to meet that deadline," Ladsariya said.

Meanwhile, at least two persons working with Chemexcil on REACH-related activities, independently told Mint, on condition of anonymity, that India has already contacted the EU seeking an extension, citing technical snags on REACH-IT and other reasons.

An ECHA spokesperson said in an email that the agency “cannot legally postpone the deadline for pre-registration, as this would require a legislative change".

Rajeev Kher, the joint secretary in India’s commerce ministry who deals with REACH- related activities was not available for comment as he was in Madhya Pradesh on election duty.

A senior commerce ministry official, who asked not to be named, denied any knowledge of India seeking an extension.

IIFT’s Rangarajan said it was unlikely the EU would agree to an extension.

“This would be a blessing in disguise for European countries, who were facing competition from Indian and Chinese companies. Given the current economic scenario, they would not be willing to negotiate to allow fresh competition from non-EU entities."