FOCUS ON AGROCHEMICAL MORE REWARDING THAN FOCUS ON PETROCHEMICAL
With the price of crude galloping above 70US$ and one not being sure as to what would be the ultimate peak level, the petrochemical industry in India is now at the cross roads.
As the Indian crude oil production is nearly stagnating and there is no immediate prospect of any significant increase in the production of crude oil or natural gas, it is clearly evident that the country has no inherent strength in the petrochemical field,
particularly in the present context of steep increase in the global price of the crude.
With massive capacities for petrochemicals being built in Middle East countries and Iran where crude oil and natural gas are plentifully available, even the multinational companies with strong base around the world are now seeking to participate in the building of plants in the Middle East regions rather than building capacities in Europe or America. In such conditions, India stands little chance in the petrochemical field and several operating Indian petrochemical projects are certainly facing uncertainties.
Before long, a situation is likely to develop where it would be found that it would be more advantageous to import petrochemicals in India particularly from Middle East Regions rather than producing them in India. When such situation would develop, the closure of many petrochemical units in India would become inevitable. India needs to guard itself against such eventuality.
This is a challenging situation which calls for immediate reassessment and redesigning of the strategy for growth for chemical industry in India. On the other hand, we find that Government of India and the leading Indian chemical industries are yet to come out with any concrete plans to tackle this difficult situation . The need for working out alternate strategies to sustain the growth has now become a matter of national priority.
With India having to focus on its strength to work out the future strategies, there is no alternative for India other than banking heavily on the potentials of the agro chemical sector. Several of the agrochemical projects are likely to become profitable in the immediate future, with the likely steep increase in the production cost of the competing petrochemicals due to the spiraling crude oil prices.
Many of the chemicals that are made by the petrochemical route can as well be made by agrochemical route and the competing advantages of the agrochemicals vis a vis petrochemicals would become more and more evident. What is needed is the adequate appreciation of the potentials of this agrochemical field and innovative forward planning to enable India to become an agrochemical giant in the world.
It is now becoming clear that China has erred by creating huge petrochemical capacities involving several millions of US dollars to such an extent, that it cannot revert back in the present condition of the steep increase in the price of petroleum feed stock.
Like India, China too has many advantages in the agrochemical field and like India, China has also not yet exploited the agrochemical opportunity in a big way so far. Fortunately, the Indian investment in the petrochemical field has not been as massive as that of China and India should convert this position into an advantage very quickly by turning towards agrochemical sector in a big way.
What is needed is to re work out the priorities in the field of agriculture in India and go for massive investment for extending the area of agricultural crop cultivation. The extent of area of agricultural crop cultivation has not been growing in recent times, since agriculture is largely oriented towards food crops only that require irrigation and water requirement. If the focus of agriculture could be marginally shifted to other agrochemical oriented crops also, then it would be possible to immediately bring more area into agricultural cultivation and produce crops that would not be water demanding. The immediate example is jatropha. There are several other crops with medicinal and chemical value that are climate tolerant with adaptability to several soil conditions and regions.
Moreover, there is also need for large efforts and investment in organizing purposive research and development programme to develop new agricultural crops as well as to develop and optimize technology for extraction of chemicals from agro products.
The ball is clearly in the court of the Government of India and state governments, who should provide the right lead and direction to the chemical and agricultural industry in India. The writing on the wall is clear and if the government and the chemical industries would ignore the warning signals and fail to act, it would lead to a tremendous catastrophe before long.
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