Raman Ramachandran, chairman and managing director, BASF India, in an interview speaks on the potential for growth in the chemicals industry, challenges to meeting domestic demand and BASF’s plans to promote local manufacturing. Edited excerpts:

What are the challenges before the chemicals industry under the Make in India campaign?

Let’s first look at the opportunities. Chemical industry helps many industries to grow and meet sustainability requirements at the same time. Take the automotive industry, for example, which will need to comply with Bharat VI emission norms by 2020. Chemistry with advanced emissions control catalyst technology for cars, trucks and motorcycles can help achieve these goals. Speciality chemicals in general play a key role in making innovative products.

But today, the per capita consumption of specialty chemicals in India is one of the lowest in comparison to developed and other emerging markets. So there is a huge catch-up potential which Make in India will set free.

But I also see challenges to meet this demand from domestic production. India still depends on imported chemicals. Net chemicals’ imports have grown at about 20% CAGR (Compound Annual Growth Rate) during 2009-13.

This points to some limitations the Indian chemical industry is still facing in terms of availability of raw material and feedstock but also administrative rules and legal regulations. The national chemical policy which is awaiting its final nod from the government of India, aims to address most of these issues. The crucial Goods and Services Tax (GST) needs intense impetus to be implemented without any further delay.

Has the programme, since its launch, seen traction in terms of activities?

The Make in India initiative has taken some important steps towards invigorating the industry such as:

•100% FDI permitted through automatic route.

•Chemical sector delicensed except very few hazardous chemicals.

•Upcoming Petroleum, Chemicals and Petrochemicals Investment Region (PCPIR) and Plastic Park to provide state-of-the-art infrastructure—The department of chemicals and petrochemicals has released the first instalment of 8 crore grant in aid for setting-up of Plastic Parks at Madhya Pradesh, Odisha and Assam.

•Trade in Chemical is free except those which attract provision of international conventions.

•Strong government support for research and development by way of recognition of R&D units by department of scientific and industrial research (DSIR), direct and indirect tax benefits, state government incentives, intellectual property rights protection.

•Government focus on reduction of customs duty and also addressing cases of inverted duty structure.

•Various incentives like state incentives, export incentives and area-based incentives offered by Indian government to the chemicals sector ensure a global shift towards India as the world’s chemical manufacturing hub.

What are BASF’s plans under this campaign? How does it want to promote local manufacturing in the country?

Looking at some fundamental trends in India such as the demographic development and the increasing purchasing power of a growing middle class, BASF has decided to invest in India already some time ago. In October 2014, we inaugurated our production site in Dahej, at 1,000 crore our single largest investment to date in India.

Last year, we inaugurated our fourth and largest construction chemicals plant in India, located in Nellore, Andhra Pradesh. Later this year, we will inaugurate our new catalysts production site in Chennai for which we broke ground in 2013. Our established manufacturing sites in Mangalore, Thane and Ankleshwar will continue to serve demands of many industries including automotive, paints and coatings, construction, paper, leather or personal care.

We are also building an innovation centre to leverage R&D talent in the country and to contribute to developing sustainable solutions.

So, I strongly believe that with our expanded manufacturing footprint and innovation capability, combined with the right product mix, we are well positioned to help make Make in India a reality.

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