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Alkali BulletinAlkali Bulletin(For Restricted Circulation) February 2020Volume XLII No. 02

Dear Reader,

The Union Budget for 2020-21 presented by the Finance Minister in Parliament did not contain any relief for the alkali and PVC industry. There was expectation of some relief, particularly in the context of a slowdown in the economy and a more challenging trade environment.

The health crises arising from the spread of the novel corona virus that originated in Wuhan, China in December 2019 is spreading across countries and has already started affecting economy and trade. In fact, restrictions on international travel are tightening and fears of curtailment of trade are increasing. The effects of this crisis could be more wide-spread for two major reasons: the virus being of novel strain & possible absence of vaccine, along with limited information from China on its spread will be the first challenge. The second challenge is China’s major role in international trade which could impact a large number of countries when restrictions on movement of goods come into place. The coming weeks could be crucial in understanding the impact of the virus on human health across countries and on international trade. While some sectors that depend on China for raw materials and intermediates could suffer, there will be many other sectors competing with China that could benefit from the crisis.

The visit of US President Donald Trump to India was expected to yield some benefits by overcoming the trade impasse. The discussions between our PM and the US President were positive and reflected the bonhomie between them, providing hope of an early resolution of outstanding trade issues. Hopes of a possible free or preferential trade agreement between India and the US were high with the announcement that the US Trade representative has begun the filing process to initiate talks. Meanwhile US continues to exert pressure on our government to concede tariff concessions for exporting soda ash to India. Any move to offer concessions in custom duties on soda ash can only be at the cost of the domestic industry’s interests which is already under pressure due to huge imports. The industry is taking recourse to trade remedy measures and has filed petitions, an indication of the severe stress the industry is passing through.

K. Srinivasan Secretary General

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I. ARTICLES & FEATURES

A Report on Proceedings of ICC Chemical Outlook Conference held in February 2020, Mumbai - Ms. Harjeet Kaur Anand, Joint Director (Technical) AMAI 1

Our Experience of Responsible Care® - A Doorstep to Sustainability - Dr. R. N. Sahu, DCM Shriram Limited., Jhagadia, Gujarat 10

Shell and Tube Heat Exchangers - Case Studies on Corrosion & Fouling (PART-III) - Dr. S.K. Chakravorty, Consultant (Plant Engineering) 12

Budget 2020 - Fortifying the Sustainability Paradigm - Dr. M.P. Sukumaran Nair, Former Secretary to Chief Minister Kerala and Chairman, Public Sector, Restructuring & Audit Board, Govt. of Kerala 17

Economic Impacts of Coronavirus Come Home - Mr. Ravi Raghavan, Editor, Chemical Weekly 19

China’s Sneeze – Mr. K. Sahasranaman, Independent Consultant - Process Engineerging, Energy, Utilities and Safety 21

Plugging Import Leaks - Anti-dumping duties have often failed to support domestic industry - Mr. Joe C. Mathew 23

Futuristic Fuel - Capital City gears up to test H-CNG in DTC Buses 26

World's Learnings get translated in India faster - An interveiw with Mr. Janardhanan Ramanujalu, Vice President & Regional Head, SABIC South Asia & ANZ 27

Training Programme on “Safe Handling of Chlorine“ at DCM Shriram Ltd., Kota, Rajasthan 30

38th Training Workshop on “Safe Handling of Chlorine and Emergency Preparedness” at Finolex Industries Ltd., Ratnagiri - Mr. Subhash Tandon, Advisor Technical Services AMAI 31

Beacon-Messages for Manufacturing Personnel 33

II. NEWS DIGESTGeneral

Donald Trump’s GSP gambit has worked in India’s favour 34

First leg of India-US trade deal likely in 3 months 34

Lanxess launches disinfectant for coronavirus 35

Competitiveness unchecked: The story of India’s exports and factors impeding growth 35

Cos under supply pressure can invoke force majeure to bypass contracts 35

Exporters not keen on GSP restoration 35

Coronavirus: Industry seeks cut in import duties to tackle disruptions 36

Response will be speedily announced to offset coronavirus impact on industry: Nirmala Sitharaman 36

Coronavirus outbreak may send earnings growth into a tailspin 36

Sop withdrawal by US may not hit exports hard 37

Decline in global merchandise trade volumes to continue for now: WTO 37

CONTENTS

Chlorine Emergency Response Network Toll free no. 1800-11-1735

Crude boost for India Inc as global oil demand dips over coronavirus epidemic 37

Coronavirus affecting exporters' sentiment globally: FIEO 38

Virus may hit 28% Indian imports 38

Goods exports dip 1.6% to $25.97 billion in Jan; trade deficit at $15.17 billion 39

Government has taken specific steps to boost exports 39

GSTIN made mandatory in export, import papers 40

RCEP return hope ebbs as India skips meeting in Bali 40

Govt. arms itself with powers to ban import or export of any item 41

FICCI calls for national wastewater policy 41

India exploring ways to source crude oil from Russia: Oil Minister 41

Budget helps cut cost-of-credit, resolve pending issues of refunding taxes not under GST: Exporters 41

Chemicals and Petrochemicals

Coronavirus impact: Gujarat dye intermediate industry feels raw material shortage 42

45 chemical firms in Dombivli fined Rs 25 lakh each for pollution 42

Farmers from Tamil Nadu delta welcomes government decision scrapping PCPIR plan 43

The coronavirus has a silver-lining for Indian specialty chemicals after all 43

Senators urge Trump Admin to ask India reduce hike in soda ash import duties 44

Indian Hydrogen Market Projected to Grow to $727 Million by 2030 44

Member Units

Reliance, Aramco accelerate refinery stake sale talks 44

Reliance Industries eyeing Rs. 5,100-crore expansion at Dahej 44

Meghmani ranked 490th in Fortune 500 list 45

Reliance Industries to push use of waste plastic in road construction 45

III. NOTIFICATIONS/PRESS RELEASES/ MEMORANDA

Final Findings dated 19.02.2020 issued by Ministry of Commerce & Industry, 46 Department of Commerce (Directorate General of Trade Remedies) - Anti-dumping investigation concerning imports of "Chlorinated Polyvinyl Chloride (CPVC) Resin- whether or not further processed into compound”, originating in or exported from China PR and Korea RP

Alkali Bulletin February, 2020

Disclaimer: Information published in this magazine is reproduced from various sources. Every effort is made to minimize errors while reproducing for publication in Alkali Bulletin. However, readers are requested to verify and make appropriate enquiries and satisfy themselves about the veracity of information published in this magazine before use. The publisher or AMAI will not be responsible for decisions taken by readers based on information published in Alkali Bulletin.

Alkali Bulletin February, 2020

Overview of Global and Indian Chemical Industry

Chemical industry is important for India: Though direct contribution of chemical industry to India’s GDP is about 7%, its indirect contribution is approximately 60%. But on a global scale it punches far below its weight Less than 3% of $3.5-trillion global industry (2017).

Today, Indian Chemical Industry is 6th largest in the world and contributes 3.4% to the global chemical industry. Total market size of chemical industry was US$ 163 Billion in 2018 and is expected to cross US$ 300 Billion by 2025 at CAGR of 9%. Current per capita consumption of chemical products in India is 1/10th of the global average. There is significant growth potential with underlying growth drivers such as increasing population, rise in disposable income, urbanization, growing middle class, etc. Growing demand has been met with increasing imports (Imports have increased by almost Rs. 3,00,000 Crores at CAGR of ~16% during period 2007-08 to 2018-19). Consumption driven market provides opportunities for import-substitution across value chain.

SALIENT FEATURES OF INDIAN CHEMICAL INDUSTRY

For every $1USD generated by chemical industry, downstream economy benefits over $4USD• Indian chemicals & petrochemicals sector has the potential to help India reach its goal of $5-trn economy by 2025• According to Ministry of Chemicals & Petrochemicals statistics, Chemical & Petrochemicals imports were worth $55 billion

in financial year 2018• As we are expecting the industry to grow to $304 billion by 2025, imports are also likely to increase to $126billion. This

indicates that as the market grows, trade deficit is also growing at a faster rate.

India’s Increasing dependence on imports- 2018-19

India : Deficits indicative of the surging demand; Large + unsustainable chemicals imports support India’s demand• India continues to remain major importer of 80+ chemical intermediates across C1-C8 value chains

A REPORT ON PROCEEDINGS OF

ICC Chemical Outlook Conference held in February 2020, Mumbai

Alkali Bulletin February 2020 |1

Harjeet Kaur Anand Joint Director (Technical) AMAI

Total Chemicals Trade of India in last five years in billion USD

Export: $178 bn Import: $197 bn Trade Deficit: -$19bn

"The State of the Global Chemical Industry is getting complex with a demographic change happening with Rise of Asia and declining trend of West. This will result in greater Political

Instability, Trade Wars, Lower Interest Rates, Scarcity in Skilled Workforce"

• India is a net importer of chemicals: Trade surplus comes from only three sub-sectors: Pharmaceuticals, Pesticides and Dyes

• Global Agrochemicals trade includes Europe accounts for ~50% of global agrochemical exports followed by China (14%), Germany (12%) and USA (12%).

• India ranks second in agriculture production globally and 13th in agrochemical use.• China, USA and Brazil together account for ~62% of agrochemical use.• There is huge agrochemicals demand emerging from many other countries.

US$ ~ 200 billion opportunity exist for the domestic industry to capitalize with appropriate support from authorities

Indian Chemical & Petrochemical Industry need to be Self-sufficient and Sustainable to secure its future

COMPETITIVE FEEDSTOCK• India by nature is feedstock disadvantaged country• Competitiveness of feedstock is therefore driven by supply chain efficiency for both imports as well domestic sourcing• High transportation cost, dependent heavily on Road movement (More than 60% dependence, compared to global

average of less than 40%)• Increasing Shipping Competitiveness both for imports and domestic movement• Sea freight for coastal movement of Liquid/Gas cargoes are abnormally high compared to sea freight payable on cargoes

imported from USA or AG keeping in view the distances

COASTAL SHIPMENT IN INDIA IS DISCOURAGED FOR THE REASONS,• Distance from Houston Port (USA) to Hazira Port is 11,000 Nautical Miles whereas Kochi Port to Hazira port it is only 1600

Nautical Miles• ISO transportation from India to USA is ~Rs.15000/- per MT, whereas for Kochi to Hazira, its ~Rs.7500/- per MT• Freight cost is almost five times for Kochi to Hazira (on MTKM basis) as compared to USA to Hazira•While a difference of 15-20% due to ship size is understandable, such a huge gap discourage the coastal shipment in India

2 | Alkali Bulletin February 2020

COMPETITIVE OSBL INFRASTRUCTURE• About 40% of the capital cost of chemical plant is in outside battery limit in area such as tank farms, utilities, effluent

treatment, storage tanks, etc.• Competitive Pipeline & Tank Farm: Transporting Liquids/Pressurized gases by pipeline shall cost less than 10% of road

transportation (tankers/trailers) cost. There are Multiple tanks to one common tank farm in Chemical park• Competitive Utilities with Common: Steam & Power supply, Cooling water and fire water, Effluent Treatment (CETP),

Desalination plants (for consistent and quality supply of raw water)

The chemical cluster should offer all the above, including land on annual contract / rental basis. The entrepreneurs capital employed would come down significantly with favorable capex-opex trade-off.

WAY FORWARD… WHAT IS THE REQUIREMENT……

Industry along with Ministry of Chemicals need to focus on the following:

• Support for Infrastructure financing (on 15-20 years tenure) from private equity/ pension funds• Liaise with Ministry of Shipping and Ports as well as Customs Department to strengthen port facilities, minimize cost of

logistics as well as reduce turn around time• Engage with Consulting Company to recommend framework for service providers (OSBL infrastructure, social

infrastructure, consortium opportunities, etc.) to create economically viable and sustainable business model on the basis of “Aggregation” and “Distribution”

• Collaborations between bulk chemical and Fine & Speciality chemical companies need of the hour• Increasing regionalization of trade will improve the case for local capacity additions in India• India remains an island of happiness – solid growth albeit on small base• China’s chemical industry is now ten times Indian chemical industry• US-China relations and how growth in China plays out will have implications here• Tightening global regulations will come home …. Not too far into the future

EXPERTS RECOMMEND,• Master plan for Chemical Park to be prepared by a professional organisation, incorporating the best global practices• Mega projects require extensive planning• Mega Projects are generally defined as the ones above USD 1 Billion (~Rs. 7000 Crores), Complex in nature, Long

duration, Involve large labour pool• Risks in mega projects need to be identified and managed• Mega Projects require 4 to 5 years for execution phase • Early identification of risks and their mitigation and Extensive planning is the key to project’s success• Time is running short for meeting “Vision 2025”

OVERVIEW OF CHINESE CHEMICAL INDUSTRY:China Targets 90% Self Sufficiency of Key Input Material: China significantly improved its self-sufficiency. It focused backward integration -from textiles to Polyesters. Now integrating Petrochemicals with refinery. Investments in new technologies to leverage advantaged feedstock (Coal): MTO / CTO / PDH. Chinese government invested heavily in infrastructure.

India needs to learn from China’s self-sufficiency model Changing Crude Oil Usage World –Oil to Chemicals: 2020 to 2030+: 80% for Chemicals and Petrochemicals production and 20% for Fuel

China is now the world’s largest producer & consumer Import dependent industry….But Colorants (dyes & pigments), Agrochemicals, Pharma, F&F ingredients have significant trade surplus


CIRCULAR ECONOMY In India, soon Circular economy will be at centre stage. It is Important to de-risk transportation fuels by integrating crude to chemical for ensuring availability of critical feedstock for downstream industries. Demand for speciality and high performance product will grow rapidly. Innovative business model, technological solutions for sustainable development will be key. CO2 capture, enhancing plastic recycling will be important. Need world class infrastructure support from Government for accelerated growth.

There is a commitment of Global Brands like Loreal, M&S, Pepsico, Coca Cola, etc. for 100% circular economy by 2025. This will impact Chemical Industry in plastic demand on account of reduction in plastic packaging as announced by user industries


in the short run. Increased recycling is likely to impact growth of virgin materials consumption. However, in the long run, newer applications and more intensive use of plastics in existing applications are likely to more than offset the reduction in consumption in the short run.

Plastics saving humanity yet again -2020 –CORONAVIRUS

Chemical & Petrochemical industry – providing solutions to all challenges to humanity; we have to manage it well by Recycle and Reuse.

CHEMICAL INDUSTRY SEEK SUPPORT FROM GOVERNMENT:

Tariffs: • Reduce Customs Duty for raw materials, especially those not made in India. • Increase import duty by 2.5% for 7-10 years• Align export incentives with trends in China• Address challenge from FTAs

Infrastructure: • Revamp PCPIR policy • Allocate (encourage/mandate) feedstock allocation to third party investors• Delineate and enforce strict zoning in chemical parks

Regulations:• Revamp environmental clearance procedure• Relook archaic emission norms• Give product agnostic approvals• Fast track approach for compliant companies• Incentivise innovations

HOW COULD TIGHTENING CHEMICALS REGULATIONS AFFECT US?• Scope of chemicals under regulatory scrutiny will expand• Restrictions will impact many industries• Agreement on a globalised model for chemicals regulation seemsdistant for now• Even so, market forces will make countries outside EU take into account requirements set by REACH• REACH will also influence by diffusion of its data and provisions• Convergence between OECD & BRIC countries will evolve gradually….•……A one size fits approach seems unlikely in the short term• Decisions on management & use of chemicals need to be holistic, but may not be• Simple solutions based on partial understanding of inherent hazard may• appear logical, but could have unintended consequences

SPECIALITY CHEMICALS SECTOR: EMERGING BOON FOR INDIAN CHEMICAL INDUSTRYRisks and opportunities emerge simultaneously for businesses. By 2030, there is global potential in low income food market, food wastage reduction solutions, renewable expansion market opportunities, affordable housing, energy efficiency solutions for buildings, electric & hybrid vehicles, etc. Innovations in Speciality Chemicals can help realize these opportunities. Even with an educated workforce, India has limited investment in R&D, which needs to be geared up.

Several Areas like E-mobility, Digitalisation, Sustainability and plastic waste are driving innovation in speciality chemicals.

• Chemistry is already playing a larger role in the automotive industry. - Expect more• innovations in emission reduction, light-weighting, e-mobility (battery materials), product differentiation• E-mobility – Innovative battery materials will shape its future. - By 2025 our innovations in electric & battery material aims

to double the driving range of midsize cars from 300 to 600 km on a single charge• Digitalization- critical for faster R&D into new materials


INDIA MANUFACTURING SECTOR’S output remains close to that of agriculture. A sign of industrial sluggishness. China’s manufacturing sector’s output is 400% higher than its agricultural output. For India to reach $5 trillion economy by 2024, the size of manufacturing sector should reach $1 trillion (from the present $0.4 trillion).•Water management is crucial: This has to be taken as seriously.• Technologies exist: Technologies are existing to create a sustainable future.• Partnership Approach: You need a knowledge partner who will bring holistic view.• Design solutions for future



SINGLE-USE PLASTICS – A RISING THREAT & OPPORTUNITY?!Plastic waste production is expected to double in the next 15 years. About 200 MMT of plastic is landfilled or ends up as litter. Improper waste management leads to significant leakage into oceans and seas (about 8 MMT per year). By 2025, this could mean 1 ton of plastics/3 tons of finfish. There is an untapped value in post-use plastic (used to incentivize collection & reprocessing) but also in innovation of new materials.

INVESTMENTS IN INDIAN CHEMICAL AND PETROCHEMICALS INDUSTRY: ISSUES & CHALLENGESMany new investments worth about $70 Bn have been announced in the last 3 years in India mostly in Petrochemicals and Speciality Chemicals.

Foreign investment in the Chemicals industry is at only 4% of the total investments in India as $16.6 bn FDI inflows to chemicals during April 2000 –March 2019 and 18% Growth in FDI equity inflows (FY 2014 to FY19).

KEY AREAS OF CONCERN• Limited availability of key feedstock and lack of infrastructure has made it difficult to attract and lock-down large

investments• Historically, poor Ease of Doing Business ranking driven by difficulty in obtaining necessary permits and enforcing contracts• Efforts to spur investment in Chemicals sector have still kept total contribution of investments in sector to <5%• Consistent improvement in Ease of Doing Business rankings (from 142 to 63 out of 190 countries during 2015-2020), has

been driven by Govt. policies aimed at attracting foreign investments• Still India lacks attractiveness for investments compared to its Asian peers due to high factor costs like interest cost & power

cost and lack of business friendliness• Shanghai Chemical Park : Common infrastructure invested helped to significantly reduce capex of new builds (by about

40%), incentives were offered to attract investments• Chemical industrial parks provide “nine supplies and one levelling” (Electricity, Industrial water, Steams, Natural gas, Waste

water treatment, Communication network, Rain sewer, Firefighting, Road)

INCENTIVES OFFERED BY LOCAL GOVERNMENT TO ATTRACT NEW INVESTMENTS BY CHEMICAL PLAYERS:• Tax exemption for imported equipment• Income tax of productive foreign-invested enterprises is 15%, exemption of income tax for first 2 years, 7.5% for next 3

years• Tariff and VAT exemptions for export products• Exemptions on property tax for 5 years

CRITICAL DRIVERS TO BOOST INVESTMENTS1. State-of-art infrastructure at the perfect location: Build, operate and maintain specialized common infrastructure &

utilities helps companies save up to 40% on capital outlay and 15% on transportation cost


2. Integrated Chemical Hub with feedstock access: Create an integrated petrochemical and specialty chemicals master plan with unrivalled connectivity throughout the process chain

3. Policies & incentives support: Incentives to promote local production and export competitiveness Fast track approvals for new investments/ expansions

4. Innovation & technology development: Encourage R&D and innovation through incentives Sector specific skill development programs

5. Promote industry – institutions partnership for technology development

KEY ACTIONS TO DRIVE INVESTMENTS IN THE ECOSYSTEM OF INDIA1. Conceptualize, build & operate state of art specialized common petrochemicals infrastructure and utilities2. Create Integrated Chemical Hubs with anchor investors ensuring supply of specified feedstock volumes to downstream

units3. Policies & incentives support to improve competitiveness and ease of new project implementation to push investments4. Create a “Chemical Innovation Fund” to develop the knowledge ecosystem and promote industry-institution partnership

R&D SPEND ACROSS COMPANIES SHOW THAT

India invests only about 1% of their total revenues, compared to Chinese players spending 3% and globally 5%.

There is a need to create a Chemical Innovation fund with contribution from chemical companies equally matched by the Government

Industry associations and Govt. agencies can use this fund to give projects to research institutes to develop new products, indigenous technologies and processes, skill development programs, etc.

EVOLVING TRENDS IN INDIA FOR A SUSTAINABLE FUTURE• Climate Neutral • Shift to renewables – Wind and Solar• Aligning portfolio with SDGs Three ‘R’s• Industry 4.0 Approach• Big push on Wind & Solar energy projects. 138% increase in renewable installed capacity from 2014 to 2019• Renewable energy potential in India: 1000+ GW• Renewable Purchase Obligation (RPO) mandated by the Government• Increased focus on sustainability projects under CSR initiatives• Increased awareness/ implementation plastic ban


Our Experience of Responsible Care® A Doorstep to Sustainability

Dr. R.N. Sahu EHS Head

DCM Shriram Limited., Jhagadia

Shriram Alkali & Chemicals Ltd. (A Unit of DCM Shriram Ltd.), Jhagadia, Gujarat has been authorized by Indian Chemical Council to use Responsible Care (RC) Logo w.e.f. 01.01.2020 for next 3 years. The unit has implemented all Codes of Management Practices as per ICC’s Responsible Care Manual in their operation processes.

The Unit started the preparation to realign their operations with RC Manual requirements in April 2019. Mr. Shekhar Khanolkar, CEO signed the undertaking on guiding principle. Mr. Aditya Shriram, President and Mr. K. R. Vaidya, Unit Head and their Business Head, besides employees made

commitment for implementation of its codes by signing on a white board.

A systematic training was organised for each employee through external expert and scientific approach was developed for the implementation of six RC codes. A dedicated senior team was identified to deal and implement each code. Their responsibilities included assessing the GAPs against requirements, their implementation and preparing the unit for final audit.

Snapshot of the codes are as under:

Code-1, Process Safety is designed to support preventing un-intended

hazardous releases or loss of containment. Each management practice in this code describes an activity or approach to support preventing fires, explosions and accidental chemical releases. Collectively, the Practices encompass process safety from the design stage through operation, maintenance and training.

Code-2, Employee Health & Safety: provides Management Practices designed to continually improve Health & Safety of employees and other stake holders. These practices provide a multidisciplinary


Mr. K.R. Vaidya, President & Unit Head and Dr. R.N. Sahu, EHS Head, Shriram Alkali & Chemicals receiving the Logo from Mr. Samir Kumar Biswas, IAS, Joint Secreatry, Department of Chemicals and Petrochemicals, GOI and Mr. Daniel Roczniak, Director – Standards, Sustainability & Market Outreach, American Chemistry Council on 14

February 2020 during 13th Annual India Chemical Industry Outlook Conference at Mumbai.

means to identify and assess hazards, prevent unsafe acts and conditions, maintain and improve employees and contractors’ health and encourage communication on Health & Safety issues.

Code-3, Pollution Prevention designed to achieve reductions in the amount of all possible contaminants released to the air, water and land from site operations. These reductions are intended to respond to public concerns and to further increase the safety margin for public health and environmental protection.

Code-4, Emergency response is to ensure emergency preparedness and to communicate the community about it. It demands time to time trial of the response to various identified scenarios and commitment for openness and community dialogue.

Code-5, Distribution is designed to prevent any adverse effect to human health or environment during transportation and use, thus reducing the risk of harm posed by the distribution of chemicals. It ensures tracking of the chemicals from packing at manufacturing site till final utilization at the customer’s end. It also ensures road safety during transportation and drivers’ development for safe handling of the goods.

Code-6, Product Safety & Stewardship is to make health, safety and environmental protection an integral part of designing, manufacturing, marketing, distributing, using, recycling and disposing of organization’s products. The Code provides guidance as well as a means to measure continual improvement.

The advantages of implementing RC Logo:• Teamwork by bringing together

diverse staff from multiple

management teams, including EHS, Process, Sales, Marketing, Purchase, HR, Maintenance, Security and Community.

• Creating new cross-functional understanding, resulting in increased operational efficiencies within our organization

• Improved system to safe operation of the plant

• Improvement of the Quality, Environmental, Health, and Safety Knowledge to avoid harm to people and the environment

• Use of resources efficiently and minimization of waste

• Transparency in reporting performance, achievements and shortcomings

• Engagement with people to understand and address their concerns and expectations

• Improved confidence with governments and society

• Deliver quality product and safe handling of products throughout value chain process

Responsible Care is an Ethical Framework towards Safe Management of Chemicals, Social Facelift and Performance Excellence in totality and therefore, a new way of the overall sustainability for the site.


In continuation to the author’s article on Shell & Tube Heat Exchangers Part-II, dealing with the aspects of corrosion and fouling problems, two real-life case studies, has been discussed in this article. First case discusses analysis of pitting corrosion in a tube heat exchanger and the second case discusses the fouling problem in a heat exchanger.

CASE-1: Corrosion Failure of Tube Heat Exchanger used for heating cold basin water.A Tube heat exchanger was made of 316 stainless steel straight type. It served to heat up cold basin water in a process industry. Basin water was supplied from desalinated water which contained high chloride level as high as 800 ppm. Temperature of the heat exchanger tubes reached as high as 80C. After operating the heat exchanger for a short period of time, tube leakage developed in the exchanger leading to a forced outage of the process plant. The following investigations were performed for analysing the tube leakage:

• Visual Examination• Chemical Analysis• Corrosion Testing• Microscopic Investigation

Visual Examination:The heat exchanger as shown in Figure-1 was cut to remove the tubes for visual examination. Several tubes were taken, cleaned and examined by naked eyes. There were no holes seen on the examined tubes. After that, a cross section of the heat exchanger was also cut to examine the contact points between the stainless steel tubes and the heat exchanger head. Even then

the leak points on the tubes could not be observed. This may be due to the fact that there was a large number of stainless steel tubing gathered in one bundle making it difficult to determine the leak points on the tubes.

Chemical Analysis:The chemical analysis of the tube material was performed using the Spectrolab (optical emission spectrometer device) to determine the main elements of the manufactured tube material supplied by the OEM (original equipment manufacturer). Table-1 shows that, the tube material is made of 316 stainless steel as had been informed by the company.

Table-1: Chemical composition of tube material

Corrosion Testing:Specimens of the tubes were subjected to electrochemical corrosion (cyclic anodic polarization test) testing using computerized potentiostat in solution containing 1000 ppm chloride ions (slightly in excess chloride ions than existing in the basin water) prepared by dissolving 1.37 g of NaCl in distilled water. The test was performed at room

temperatureandat80˚Ctosimulatethe operating conditions. The test gave important information about the susceptibility of tube material towards pitting corrosion.

At room temperature, current remained passive (about 3x10-5 A Cm-2) until 0.6 V and then increased rapidly (refer Figure-2). The potential at which it increased was taken as pitting potential.

Upon reversal of the potential scan at about 1 V (blue line) a considerable loop was observed indicating that the alloy takes time till restoring passivation. The phenomenon was associated with materials which suffered from pitting corrosion.Athightemperature(80˚C),

current remained passive (about 3x10-5 A Cm-2) until 0.4 V and then increased rapidly (refer Figure-3). Upon reversal of the potential scan at 1.028 V (blue line) a considerable loop was observed indicating that the alloy takes time until restoring passivation. It was shown that the pitting potential is decreased while the passive current is increased upon increase of temperature. The loop area was also increased at high temperature.

SHELL AND TUBE HEAT EXCHANGERSCase Studies on Corrosion & Fouling (Part-III)

Element C Mn Cr Si Ni Mo Fe

Wt % 0.0254 1.98 17.4 0.366 12.78 1.89 Bal

Fig-1: Image of the Heat Exchanger

Fig-2: CYCLIC ANODIC POLARIZATION CURVE OF TUBE MATERIAL IN 1000 PPM CHLORIDE ION AT ROOM TEMPERATUE

AND 3 MV/S SCAN RATE.


Dr. S.K. Chakravorty, Consultant (Plant Engineering)

After performing cyclic anodic polarization experiments and determining pitting potential, tube specimen was fixed at potential slightly higher than that potential for a sufficient amount of time (2h). This test (potentiostatic test) provided conditions favouring the occurrence of pitting corrosion and was conducted so that occurrence of pitting could be seen under the microscope. Steady currents of 6x10-4 A Cm-2 and 5x10-5 A Cm-2 were obtained at room temperature and80˚C,respectively(referFigures-4& 5). The increase in temperature led

to the increase of steady state current obtained and hence the susceptibility of tube material to pitting corrosion was established.

Microscopic Investigation:The pitting corrosion could be seen under microscopic examination on tubespecimentestedat80˚Casshownin Figure-6.

Corrosion Mechanism:Corrosion is expected to occur on basin water side of heat exchanger tubes due to high chloride level present in it. High chloride level is caused due to the use of desalinated water and also due to the use of hydrochloric acid for adjusting pH of the basin water. The corrosion resistance of stainless steel alloys rely on the formation of a surface protective film formed mainly of chromium oxide. Stainless steels are subjected to pitting corrosion when electrochemical or chemical breakdown exposes a small local site on a metal surface to a damaging specie such as chloride ions. The sites where pits initiate include scratches or surface compositional heterogeneities (inclusions). The pit grows if the high current density is involved in the repassivation process (the area of breakdown initiation is exceedingly small). If the rate of repassivation is not sufficient to choke off the pit growth, two new conditions will develop. First, the metal ions produced by the breakdown process are precipitated as solid corrosion products such as Fe (OH)2 which usually cover the mouth of the pit. This covering traps the solution in the pit and allows the build up of positive hydrogen ion through a hydrolysis reaction. Then, chloride

ions diffuse into the pit to maintain charge neutrality. Consequently, the repassivation becomes considerably difficult as the solution in the pit is highly acidic, containing a large concentration of damaging ions and metallic ions, and a low oxygen concentration, accelerating the rate of growth of the pit. The pit becomes the anode of an electrochemical corrosion cell, and the non-pitted surface becomes the cathode of the cell. Since the surface area of the pit is very small compared to the entire surface of the tube, all of the anodic current flows to the extremely small surface area involving very high current density. This leads to rapid penetration of tube metal structure bearing only a few pits leading to leakage of process fluid.

Conclusions and Recommendations:The tube material of the heat exchanger is found to be made of 316 stainless- steel by chemical analysis, as had been informed by the OEM.

Visual examination could not reveal the leak points on the tubes of the heat exchanger. This may be due to the fact that there is a large number of tubing gathered in one bundle inhibiting visual observation of leak points with naked eyes.

Corrosion is expected to take place on the basin water side of the heat exchanger tubes because it contained a very high level of chloride ions (800 ppm) due to the use of desalinated water and the use of hydrochloric acid for controlling pH of the same.

Cyclic anodic polarization and potentiostatic polarization experiments revealed the susceptibility of tube specimens towards pitting corrosion at high chloride levels, especially at high temperature.

Microscopic examination revealed pitting corrosion in the specimen tested at high temperature.

The chloride level in the basin water should be controlled to be less than

Fig-3: CYCLIC ANODIC POLARIZATION CURVE OF TUBE MATERIAL IN 1000 PPM

CHLORIDE ION AT 800C AND 3 MV/S SCAN RATE

Fig-4: POTENTIOSTATIC POLARIZATION CURVE OF TUBE MATERIAL IN 1000 PPM CHLORIDE SOLUTION AT 0.65 V FOR 2 H

AT ROOM TEMPERATURE.

Fig-5: POTENTIOSTATIC POLARIZATION CURVE OF TUBE MATERIAL IN 1000 PPM CHLORIDE SOLUTION AT 0.45 V FOR 2 H

AT 800C.

Fig-6: PITTING CORROSION ON SPECIMEN TESTED AT 8O0C


300 ppm. This may be done by controlling the desalination process (reverse osmosis). Desalination can be repeated until the desired level of chloride is obtained.

The use of hydrochloric acid (HCl) in adjusting the pH of the basin water may be stopped to avoid the increase of chloride content of the water. Sulphuric acid (H2SO4) could be used safely.

It was noticed that some of the heat exchanger tubes were blocked by the maintenance people to overcome the loss of flow and pressure of the fluid and to accelerate water flow. However, it is recommended to use the full number of tubes for better efficiency and reliability of the exchanger.

CASE-2: Failure of Cupro-Nickel Tubes of a heat exchanger (phenol cooler) in sea water service in a refinery:

Introduction:Copper and its alloys have long been used to fabricate heat exchanger tube bundles exposed to sea water and other marine environments. For instance, copper-nikel alloys containing 10-30% nikel have been extensively used in coastal based petroleum refineries for the tubing in sea water-cooled heat exchangers. These Cu-Ni alloys have generally provided excellent service, partly because of their good resistance to general corrosion and partly because of the inherent resistance of Cu-based alloys to bio-fouling and erosion corrosion. Based on many years of experience, design velocities below which erosion corrosion is not a problem have been established as 1.5 to 2.1 m/s (5-7 ft/s) for 70 to 30% Cu-Ni alloys. This velocity is below that which can lead to erosion corrosion failures at tube inlets and bends. It is generally accepted that in portions of the tube where flow is fully developed, velocities can be somewhat higher, perhaps 3 to 4.6 m/s (10-15 ft/s), before erosion corrosion becomes a problem.

However, most Cu-Ni alloys suffer greatly accelerated corrosion both in the presence of crevices and when exposed to sea water polluted with sulphides. Several recent surveys document the adverse effects of localized corrosion caused by dissolved sulphides on Cu-Ni alloy tubing in heat exchanger services. The localized corrosion rates as high as 19mm/year of Cu-Ni alloys were reported in the presence of crevices and dissolved sulphides.

Problem:A phenol cooler tube bundle of (70-30 type) Cu-Ni alloy tubes used to fail very frequently causing huge loss of phenol, incurring very high down-time and maintenance cost in a lube refinery. Detailed investigations were carried out for identifying the root cause(s) of the problem. In addition to that a comparative study was also made between two parallel phenol coolers (having one standby unit in the process stream), where the cooling sea water was in the shell side in one and tube side in the other.

Failure history of phenol coolers:Phenol is used in the lube refinery to improve viscosity index of the lubricating oil by removing the aromatic contents present in the lube distillates. Initially, when the Phenolifiner plant was commissioned in the refinery, there used to be only one cooler (E-202 A). Later on after about 10 years a second parallel cooler (E-202 B) was installed as a standby, since the first cooler used to fail very frequently.

The first phenol cooler (E-202A) was commissioned in 1999, handling phenol in the tube side and cooling salt water in the shell side. Originally the metallurgy of the bundle was cupro nickel (90-10 type) and later on changed to Cu-Ni (70-30 type) because of very high erosion- corrosion taking place in the heat exchanger tubes. Even after changing the metallurgy, the bundle used to give a maximum life of

1 to 2 years. The first leak in a brand new bundle appeared within 3 months and the entire bundle was condemned within 6 months. Similarly again a new fabricated bundle leaked within few months and the entire bundle was retubed in less than a year.

Therefore, a new tube bundle partially retubed with titanium tubes and cupro-nickel tubes (70-30) were installed in the phenol cooler based on the feedback received from the OEM in 2004. The tube bundle leaked again within 28 days of operation and the leaky tubes were found to be of 70-30 Cu-Ni metallurgy. The bundle had to be immediately pulled out causing very high down-time cost and loss of phenol. The leaky bundle consisted of 580 tubes out of which 400 were of titanium and the remaining 180 were of Cu-Ni. The operating temperature and pressure of phenol on the tube sidewas140-150˚Cand15Kgs/cm2respectively. The cooling salt water pressure was about 5 Kgs/cm2 and velocity of water was about 6 ft/s in the shell side.

A standby phenol cooler (E-202B) of the same size as that of E-202 A had to be commissioned in 2010 for avoiding refinery shut-down and high down-time and maintenance cost. The material of the tube bundle was again Cu-Ni (70-30 type) as was in the earlier unit. But the cooling salt water in this standby cooler (E-202B) was in the tube side and phenol was in the shell side. In this cooler the first leak appeared after a trouble free operation of 3 years and afterwards it leaked thrice in a span of 6 years making the total plugged tubes to 14 out of 580 tubes. The original tube bundle operated for about 8 years and was changed in 2018.

Observations:The following observations were made on the bimetallic tube bundle (comprising of titanium and cupro nickel tubes) of the phenol cooler E-202 A which leaked within 28 days of operation:


1. The corrosion of Cu-Ni was mainly due to the cooling salt water rather than phenol.

2. The leaking tubes were having deep pits throughout the length of the tube.

3. Fouling of the bundle with plastic strips, wooden pieces, silt and other foreign materials was observed as shown in Figure-7.

4. Accumulation of fouling materials was high at baffle supporting plates of the tube bundle.

5. Pits as deep as 1 mm was observed on almost all the tubes, below the plastic strips which were wrapped round the tubes as shown in Figure-8.

6. Dezincification was observed on most of the tubes. Reddish colour is shown in Figure-8 indicating the denicklification phenomenon.

7. Most of the pits and leaks were in 9 ‘O’ to 3 ‘O’ clock position; where settling of foreign materials could take place easily.

8. The cooling salt water was found to be having 0.2 to 0.25 ppm of dissolved sulphides.

9. No sign of galvanic corrosion on the tube bundle was observed though the bundle consisted of 70% titanium tubes and 30% Cu-Ni tubes.

All the above observations revealed that the premature failure of Cupro Nickel (70-30 type) tubes was mainly due to ‘crevice’ and ‘denickelification’ corrosion mechanisms accelerated by dissolved sulphides present in the sea water. The analysis of failure mechanisms are described below in details:

Crevice Corrosion Mechanism: A common cause of pitting corrosion in coolers using salt water is due to differential aeration or concentration cell corrosion known as crevice corrosion.

Corrosion by differential aeration arises from regional differences in the concentration of dissolved gases, particularly oxygen. This results in the setting up of an electro-chemical cell with the surface area in the region of lowest concentration becoming anodic with respect to the surrounding surface. This situation can develop under conditions of stagnant flow between two overlapping surfaces or beneath the corrosion products or any foreign material deposited on the surface. Anything that restricts free access of oxygen is likely to cause crevice corrosion.

Fouling of the tube bundle with foreign materials and wrapping of the plastic strips round the tubes are the likely causes of crevice corrosion in phenol cooler E-202 A. The localized corrosion rate in this case was found to be as high as 20mm/year which is much higher than the acceptable norm for the safe and reliable operation of the heat exchanger. Observation of severe localized

corrosion of the tubes beneath the accumulated foreign materials at baffle support plates further confirmed the theory of crevice corrosion. Moreover when the cooling salt water is on the shell side the gaps between baffle plates and tubes, and the gaps between tube sheets and tubes will act as crevices and will enhance the rate of crevice corrosion.

By comparing both the phenol cooler (E-202 A & E-202 B) tube bundles, it was observed that the cooler with salt water on the shell side failed within 28 days of operation. Whereas the cooler having salt water on the tube side operated trouble free for 3 years and could be used for about 8 years with some maintenance work carried out periodically.

Denickelification Mechanism:As seen in Figure-8, the tube-bundle of phenol cooler E-202 A suffered denickelification. The reddish appearance on the tubes is due to the porous copper mass leaving behind after dissolving the nickel content. It is a localized type of corrosion in copper-nickel alloys that leaves a spongy, structurally weak mass of the nobler alloying element at the site of corrosion, dissolving the active element causing de-alloying. The reasons of de-alloying are due to mainly dissolved gases like oxygen, chlorine, and carbon dioxide in salt water. The attack could be accelerated by high temperatures and low velocities causing near stagnant conditions.

Dissolved sulphides present in the sea water might have played its role in aggravating the localized corrosion. The analysis of sea water indicated the presence of sulphides were as high as 0.20 to 0.25 ppm. These sulphides react with Cu-Ni alloy and form their respective sulphides and increase the localized corrosion rates by forming concentration cells. The sulphides can be formed due to the bacterial reduction of naturally

Fig-7: Fouling of the Tube bundle with foreign materials

Fig-8: Denickelification & Pitting below plastic sheets


occurring sulphates in sea water, from rotting vegetation and from industrial waste discharge. It was observed that 90-10 and 70-30 types of Cu-Ni alloys are susceptible to sulphide-induced localized attack in sea water at sulphide concentration as low as 0.01 ppm. Neutralizing the sulphides by injecting ferrous sulphate was one of the solutions but has been abandoned in the world due to pollution reasons. However, galvanic corrosion in the bimetallic tube bundle consisting of titanium and cupro nickel in phenol cooler E-202 A, was not observed.

Application of titanium tubes:Commercially pure titanium is considered to be a better metallurgy than cupro-nickel tubes for phenol cooler service using sea water as coolant. The corrosion rate of titanium inphenolat80˚Cislessthan2Mpy(mils per year) and in salt water it is less than 0.0003 Mpy. Titanium is

found to have good crevice corrosion resistancealsoupto150˚C.Smalladditions of palladium to titanium will help in avoiding crevice corrosion even at high temperatures.

Conclusion:From all the above observations and discussions, it can be concluded that the failure of 70-30 tyoe cupro nickel tubes in phenol cooling service using salt water as cooling media is mainly due to crevice corrosion and denickelification corrosion aggravated by the presence of dissolved sulphides.

Fouling of the tube bundle with plastic strips and other foreign materials were the main cause of crevice corrosion in E-202 A. Arranging of suitable strainers in the salt water system will reduce the crevice corrosion problems to a great extent.

The better performance of E-202 B tube bundle under the prevailing conditions can be attributed to the absence of built in crevices as the cooling salt water was on the tube side. If the water is on the shell side, the gaps between baffles and the tubes and gaps between tube sheets and tubes will act as crevices and cause premature failure of tubes. Therefore, it is recommended that when designing a new cooler, the cooling water stream should not be kept on the shell side.

Dissolved sulphides when present in the sea water as high as 0.20 to 0.25 ppm will further aggravate the crevice corrosion problems. Hence It is recommended to control the sulphides in the cooling sea water to the minimum possible level. It was also established that titanium has a better metallurgy for constructing tubes for the phenol coolers using salt water as a cooling medium.


The Finance Minister Nirmala Sitharaman during intervention in the budget discussions in Parliament revealed that the nominal GDP of the country increased from US$2 trillion in 2014-15 to US$2.7 trillion in 2018-19; that the average GDP growth has been 7.4%; and inflation has come down to 4.5%. She also noted that the economy is going strong despite apprehensions from different corners and that ‘green shoots’ of economic recovery are visible in several sectors.

Budget 2020 has invited mixed responses from different political affiliations, industry circles, professionals and the academia. Most of these comments and observations are centred around the benefits it brings to the common man; its catalytic role in addressing the recessionary trends in the national economy; and the ingredients it contains for driving growth in the economy. Our commitments towards global

Budget 2020

conventions such as the United Nations’ Sustainable Development Goals (SDGs) demand incorporation of sustainability elements in all development programmes.

Developmental imperativesSeveral of the ongoing projects and those upcoming have to adopt a model and style of implementation different Budget 2020 – Fortifying the sustainability paradigm from the conventional style. Today, most people are aware that the country in its efforts to become a US$5 trillion economy by 2024, cannot proceed on the lines of earlier development initiatives. Environmental consideration is going to impose major constraints in conventional development initiatives, and therefore we have to pursue a development agenda incorporating elements of sustainability in all our efforts to advance the economy. Thus, waste elimination through improvedm

processes and equipment; energy generation and its efficiency in usage through innovation; optimisation of the use of all kinds of resources including manpower; and lifecycle approach in product design, have all become cornerstones of a low carbon economy which we may want to build and sustain.

Budget & environmental concernsLet us see how far the budget has considered these aspects.

Truly, we have to acknowledge that there are definite efforts towards

DR. M.P. SUKUMARAN NAIR Former Secretary to Chief Minister Kerala & Chairman, Public Sector

Restructuring & Audit Board Government of Kerala

E-mail: [email protected]

Fortifying the sustainability paradigm

We have to pursue a development agenda incorporating elements of sustainability in all our efforts to advance the economy,,

,,


addressing environmental concerns confronting the country in the right perspective, by providing fund support relevant to schemes falling under different sectors.

The proposed solar initiatives, under PM-Kusum, to provide 20 lakh farmers stand-alone solar pumps; helping another 15 lakh farmers to solarise their grid-connected pump sets; and scheme to enable farmers to set up solar power generation capacity on their fallow and barren lands and to sell it to the grid, are helpful to promote sustainability in the agricultural front.

The village storage scheme is intended to provide farmers with a good holding capacity, reduce their logistics costs, and reduce wastage of produce. Steps proposed to enrich local water sources, recharging existing sources, promoting water harvesting and desalination are all relevant to sustainable development. On the sanitation front, allocation of Rs.12,300-crore for Swachh Bharat Mission for 2020-21 and the commitment to end open defecation will certainly add to the environmental quality of our neighbourhoods.

Emphasis on management of liquid effluents and grey water, solid-waste

collection, source segregation, and processing are right initiatives to better the environment. Traffic congestion in most of our cities is a major menace, resulting in atmospheric pollution. The National Capital Region (NCR), including Delhi, is the best example. A ‘green’ initiative in the budget is the proposal to develop the 148-km long Bengaluru Suburban transport project, at a cost of Rs. 18,600-crore, and to have fares on metro model for easing road congestion. It could be replicated to other major cities also.

States that are formulating and implementing plans for ensuring cleaner air in cities above one million deserve the support.

Energy initiativesThe budgetary allocation of Rs. 22,000- crore to develop the power and renewable energy sector in 2020-21 is well placed. So also is the proposal to expand the national gas grid from the present 16,200-km to 27,000-km.

Energy efficiency improvement programmes initiated in major consuming segments such as the oil & gas, refining, fertiliser, petrochemical, steel, cement, bulk manufacturing have already paid off. Still avenues for incremental savings exist in many of the above industries with change of technology and feedstock, as also by focusing on overall resource optimisation remain to be harnessed.

The budget also proposes to shut down old thermal power plants with carbon emission above pre-set norms. The proposal for the Coalition for Disaster Resilient Infrastructure (CDRI), on the lines of the International Solar Alliance, is intended towards mitigation of natural disasters and foster sustainable development through capacity building, skill development and adoption of sector-specific Best Available Techniques (BATs).

Role for emerging technologiesSteps proposed towards encouraging proliferation of emerging technologies like data analytics, machine learning, robotics, bioinformatics and artificial intelligence will certainly support the country’s sustainability initiatives. We may have to assess the environment burden and prioritise areas where these efficiency-betterment tools and technologies can innovatively alter existing practices and render them sustainable through a fruitful strategy and plan.

On the whole, the budget has several proposals intended to catch up with the UN’s SDG commitments. How far these projects will take off and gain maturity during the budget year remains to be seen!

(Reproduced with permission from Chemical Weekly March 3, 2020)


The bad news from the coronavirus – termed COVID-19 – epidemic continues, with rising number of infections and mortalities, despite the unprecedented lockdown in several provinces of China. As the virus takes its toll on human lives, its economic consequences are being felt not just in that country, but across the world as supply chains are getting depleted and uncertainties mount about their replenishment. The impact on the chemical and allied industries will be sizeable, though not easy to fully comprehend as of now – China is, after all, the world’s largest producer and consumer of chemicals.

In India, concerns are being expressed over possible shortages of medicines, in particular, given the Indian pharmaceutical industry’s dependence

on imports from China for several active pharmaceutical ingredients (APIs) and their intermediates. Prices of several other chemicals have risen in the past weeks in major markets, as stocks are down. Respite is only likely when workers return to factories in China, and production and shipments resume. But it is still anybody’s guess how long it will take for normalcy to return.

Impact on Chinese chemical demand & supplyCOVID-19 is expected to have a greater economic impact than the SARS virus that hit China and several other countries in 2003. For one, China’s much larger economy is no longer growing at the blistering pace it then was. The virus this time around is more contagious, though mercifully not as

lethal, which has meant that the area impacted is broader and the restrictions imposed on people movement more widespread. By some reckoning, nearly a third of China’s population in excess of one billion now faces some constraint to free movement. Economic activity in many regions is at near-standstill, as people huddle up in homes, isolated from all but immediate family.

Uncertainty remains about how the virus spreads from one person to another, with some reports claiming it can spread, not just by close proximity, but even through air conditioning ducts (in one incident reported from Hong Kong). While all but five fatalities have been in China and the mortality rate is below 2% (or possibly much lower), the fear in South East Asia is palpable.

In such a fearful environment, consumption has taken a backseat. What toll COVID-19 will take on China’s GDP for 2020 is unclear, but experts have pegged down growth to between 4-5%, from about 6% prior. Given that a 1% contraction in GDP translates to a loss of approximately 2.5-mt of base chemical demand, the overall decline could be between 2.5-mt to 5-mt. This is a vacuum that would have to be filled by finding markets elsewhere if operating rates are to hold, but that too is unlikely. China is also the world’s largest producer of base chemicals – accounting for one-third of global capacity of 750-mtpa – and plant shutdowns are taking a toll of production. How the two – the loss of output and the decline in demand – balance each other will be apparent in the weeks ahead.

Economic impacts of coronavirus come home


Ravi Raghavan Editor, Chemical Weekly

Oil and gas marketsThe most immediate impact of the crises has been felt in the energy markets, with crude oil and LNG prices on free fall. IHS Markit, a consultancy, expects China’s oil demand in February to fall by 1.4-mbpd (million barrels per day) or possibly even more, compared to previous estimates. The country is the biggest oil importer in the world, with a demand five times larger today than at the time of the SARS outbreak, and the present decline will lead to a contraction in global oil demand for the first quarter of 2020 at the very least. With crude oil supply abundant, prices had to give and they have.

The LNG scenario is similar. China has had to turn away LNG cargoes, and buyers there have sought cover under force majeure clauses (though there could be legal challenges to this). With LNG markets soft even prior to the outbreak, due a surfeit of capacity, there has been a sharp fall in prices. Indian buyers, for example, have been receiving offers below the $3 per mBtu level – a level not heard for a long time. This has prompted calls for renegotiation of LNG supply contracts that India has already entered into, and it will be interesting to see how this pans out.

Overall, the impacts of COVID-19 on oil & gas markets will be positive for India, which is dependent to the extent of 80% on imports. The direct benefit will stem from a reduction in the overall energy import bill, but there will also be additional indirect gains to the government in the form of lower subsidy bills for LPG, kerosene and fertilisers (urea).

Disruption of global supply chainsChina’s important role in industrial supply chains has been steadily rising over the last decade, and disruptions to several of these are

beginning to be felt. Symbolic of this is the announcement by Apple that production (and sales) of its iconic iPhones will be disrupted in coming weeks unless there is a quick recovery in factory operations at its contract manufacturers in China. Leading automotive companies, such as Toyota and Hyundai, have also announced curtailed operations at plants in Japan and South Korea,

due the inability of Chinese vendors to keep up with the required pace of supply of components.

In India, imports of several chemicals including titanium dioxide, citric acid, thiourea, propylene glycol – to name a few – have been disrupted. In a few instances local producers have benefitted from higher prices, but in the vast majority there is simply no option for consumers but to turn to more expensive import options (from other countries). For some industries even this option is not available, as Chinese companies dominate production to the near exclusion of others.

Impact on Indian drugs industryNowhere is this more obvious and publicised than in the pharmaceuticals industry, where fears of shortages have come to the fore, and not just in India. Ironically, the drugs most likely to be impacted are older, first line drugs, rather than more recent introductions.

This is an industry in which India has a solid reputation as an important supplier of quality generics (for local and international markets), but this is built on the edifice of imports of APIs or their key intermediates from China. This dependence is not new; concerns were raised in the wake of supply disruptions caused at the time of the Beijing Olympics, and in the current clean-up of China’s polluting industries.

In the wake of COVID-19 prices of several APIs have surged: paracetamol has risen from Rs. 250-300 to Rs. 400-450; montelukast sodium (an anti-asthma drug) from Rs. 33,000-38,000 to Rs. 52,000-58,000 (all per kg); and vitamins and penicillins by 40-50%. Of greater concern is likelihood of shortages of important drugs such as azithromycin, amoxicillin, atorvastatin, ofloxacin, metronidazole, metformin, and vitamins (B12, B1, B6, and E), among others.

Vital to revive API productionNearly six years ago the Government had appointed a committee (Katoch Committee) to suggest remedial measures to improve self-sufficiency of critical APIs and their intermediates, but, sadly, their recommendations have not been acted upon. Now, another Task Force has been set up to recommend measures to reduce the dependency. The prescription to revive growth is well known: provide basic infrastructure such as land, water, power, effluent treatment facilities etc. at competitive pricing, and smoothen the regulatory pathways for approvals.

For sustained growth, India’s pharmaceutical industry needs to build robust, well-integrated supply capabilities either internally in the company or, better still, through alliances and partnerships. Some level of imports are inevitable and no cause for worry, but the current state of affairs calls for introspection and corrective action.

COVID-19 is taking a toll as of now, but will be overcome in the weeks or months ahead. India’s chemical and pharmaceutical industries should not get complacent, but take steps to derisk their supply chains from the next disruption – whatever form it may be!

(Reproduced with permission from Chemical Weekly February 25, 2020)


China’s Sneeze

Don’t put all your eggs in one basket, advised our ancestors. Now that China is sneezing, the rest of the world has caught the cold. The supply chain logistics of many chemical manufacturers across the world lie in shambles in the wake of the Coronavirus outbreak in China. Travel restrictions and the resultant widespread absenteeism coupled with reduced demand as a result of economic slowdown is affecting the productivity and efficiency of the Chinese chemical industry.

China’s CapacityOver the past several years, China has built up humungous capacities in many chemicals. It accounts for more than half of the global production of many chemicals including methanol, MTBE, PVC and PTA. China’s share of the global production of PTA is a whopping 65%. It produces 58% of the world’s methanol and 52% of the global PVC. Other major commodity chemicals in which China enjoys the lion share of world capacity are MTBE (54%), soda ash (50%), VCM (46%), caustic soda (45%), toluene (42%), MEG (42%), mixed xylenes (40%) and paraxylene (40%). In the basic building blocks too, China has a dominant share: ethylene (18%), propylene (32%) and benzene (32%). It produces 36% of the world’s polypropylene and 18% of polyethylene. China’s share of the

world polyester capacity is a monstrous 65%.

Supply DisruptionsWith such massive capacities built-up in one corner of the world, the outbreak of Coronavirus has caused unprecedented disruptions in the supply chain. Many downstream industries in China are under forced lockdown to contain the infection. Others are operating at sub-optimal capacities due to staffing shortages.

Local demand has taken a serious hit as the economic activity slows down. Some upstream producers did not shut down during the long Lunar new year holidays and inventories had already piled up as a result of reduced offtake during the holidays. With the virus outbreak now delaying resumption of normal production in the downstream sector, major producers are feeling the heat of rising inventories. Exports are also seriously affected as restrictions on travel has impacted stevedoring and customs at ports.

Delayed RestartMany enterprises who scheduled their annual maintenance to coincide with the New Year holidays are now taking time to resume production. MIBK production has been severely curtailed with Demand Crunch Authorities have imposed severe travel restrictions to contain the spread of coronavirus. During the New Year holidays, travel dropped by as much as 80%. Wuhan, the 5th largest city in China and the epicenter of the coronavirus outbreak, was placed under lockdown on 23rd January. This was later extended to other cities covering 60 million people, the largest quarantine in history. People returning home after holidays were asked to go into self-imposed quarantine or risk punishment. Beijing and Shanghai have morphed into ghost cities with near-empty streets. The

The mysterious Coronavirus has created an unprecedented situation in China shutting down businesses and locking up people in their homes. It has disrupted the global supply chain of raw materials and intermediates. Our columnist examines the impact on chemical industry and what it can do protect itself against such Black Swan events in the future.K Sahasranaman

Independent Consultant - Process Engineering, Energy, Utilities and Safety

Over the past severalyears, China has built uphumungous capacitiesmany chemicals. Itaccounts for more thanhalf of the globalproduction of manychemicals.With such massivecapacities built-up inone corner of the world,the outbreak ofCoronavirus has causedunprecedenteddisruptions in the supplychain.


consequent lower demand for fuels means that refineries are operating at lower loads. State-owned Sinopec has imposed cuts on refinery operations ranging from 10% to 35%. The lower refinery operating loads has resulted in a supply crunch of feedstock for the petrochemical industry, which is already reeling from lower demand from downstream users. It is thus a double whammy for the petrochemical producers.

Supply ChainComparisons are being made with the SARS outbreak in 2003. But at that time, China’s economy was only the 6th largest with 4.2% share of the global GDP. Today, China is the 2nd largest economy in the world accounting for 16.3% of the world GDP. China has become a manufacturing behemoth in addition to its massive

market size. China is now much more integrated with the global economy, contributing 12.4% to the global trade. The economic and social ramifications

of the coronavirus outbreak are thus different from that of the SARS outbreak by at least one order of magnitude. Today’s supply chains are also exceedingly intricate and complex to what they were in 2003. Also the current scenario is unique in that both supply and demand have been affected. Dun and Bradstreet estimates that 22 million businesses, or 90% of all active businesses in China, are located in the regions most impacted by the virus. They further estimate that if the virus is not countered by June, the global GDP would contract by 1%.

Indian IndustryCompanies overly dependent on cheap imports from China have been badly hurt. The pharmaceutical industry is the most severely hit as it sources nearly two-third of the APIs from China. Raw material stocks are in grave danger of getting depleted within weeks. Agrochemicals and dyestuff are other sectors that will be significantly affected due to disruption of raw materials and intermediates. However, some companies see this crisis as an opportunity to increase their production and make up for the deficit from China. The loud message for the Indian Chemical industry is to unshackle itself from the overdependence on Chinese imports and look for alternate suppliers.

LessonsEvery crisis offers lessons for the future and coronavirus outbreak is no different. It has already provided an unexpected fillip to the “Work from Home” movement. Technologies and infrastructure for remote working are

expected to bloom and mature in the coming days. But the biggest business transformation will be witnessed in the future-proofing of supply chains. The current scramble for locating alternate suppliers will consolidate into building redundancy in sourcing through geographical diversification. Big enterprises will increasingly rely on disruptive technologies like Artificial Intelligence and Blockchain to smartly switch supply chains on demand. Businesses also need to reconsider the prudence of having lean supply chains and reduced inventories. It is time for a profound rethink on supply chain management and rewriting of its rulebooks.

EpilogueAs of writing (20th February), the virus has infected 74,576 people and caused 2,118 fatalities. In the absence of transparent data over the spread of the disease, rumours are rife that the authoritarian regime maybe concealing the real intensity and extent of the crisis. Hubei province, in a fresh directive today (20th February), asked companies not to resume work before 11th March.

(Reproduced with permission from Chemical Industry Digest, February 2020)

Companies overlydependent on cheapimports from China havebeen badly hurt. Thepharmaceutical industryis the most severely hitas it sources nearly two-third of the APIs fromChina. The loud messagefor the Indian Chemicalindustry is to unshackleitself from theoverdependence onChinese imports andlook for alternatesuppliers.

Every crisis offerslessons for the futureand coronavirusoutbreak is no different.The biggest businesstransformation will bewitnessed in the future-proofing of supplychain.


Last year, Varun Mittal, a Ludhiana-based manufacturer of knitted goods, observed an unusual trend in import of a key raw material (a fabric item) just after the government imposed anti-dumping duty on it to discourage imports. The import of this polyester component - trade items are identified by a globally recognised, harmonised system of nomenclature code (HSN Code or simply tariff code) - fell 99 per cent. But import under another tariff code, specified for a slightly different type of fabric item, went up by almost the same amount. “There are more than 400 HSN codes that deal with fabric. Each number has different rates. If you persuade the government to impose anti-dumping duty on some, the trade shifts to other tariff lines,” says Mittal.

This is important as India has been increasingly using ‘tariffs’ to protect domestic industry in recent times. Its attempts are being defeated by the practice of exporters shifting from specific tariff lines to more generic categories. In fact, an unusual increase

Plugging Import LeaksAnti-dumping duties have often failed to support domestic industry

Mr. Joe C. Mathew (Illustration by Raj Verma)

in imports under the ‘others’ category was one of the key problems the Narendra Modi government identified in the early days of its current tenure. “A Committee of Secretaries, set up by the prime minister, is looking into the issue. It has been observed that 78 per cent of the $18 billion (2018/19) imports (of products) that come under the administrative purview of the Ministry of Heavy Industries were in the ‘others’ category,” says a Ministry of Commerce official. The numbers are high also for sectors such as steel, telecommunications, electronics and chemicals and petrochemicals (which covers the polyester that Mittal was talking about). Steel scrap and related products worth $4.9 billion were imported in the ‘others’ category in 2018/19. In telecom, the number was $13.8 billion, while in chemicals and petrochemicals, it was $9.7 billion. On the whole, 371 tariff codes, accounting for $68.8 billion of imports in the ‘others’ category, are under scrutiny. Anti-dumping duties are imposed for a limited period (normally five years) on imported

items that are priced lower than their normal value in the exporting country to kill competition in the destination market.

India has increased customs tariffs on several products and is considering a number of cases for special anti-dumping duties over and above such normal duties. India, in fact, initiated 32 anti-dumping measures in 2018, second only to the US (41 cases) among the 164 WTO member countries. India also initiated 600 anti-dumping investigations, including 313 review cases, between January 1, 1992 and March 31, 2019. There are also other trade remedial measures that India can use like countervailing duties (subsidies and special duties to offset subsidies), safeguard duties and safeguard quantitative restrictions, apart from emergency measures to limit imports temporarily to safeguard domestic industries. But these have been used sparingly - there have been just 43 safeguard investigations and nine countervailing duties in 27 years.

Business Today has not been able to independently verify Ludhiana-based Mittal’s claim, but there are enough indications to suggest that everything is not hunky-dory in India’s efforts to check distortions in fair trade. Underinvoicing, misclassification, shifting of imports from countries


where anti-dumping duties apply, etc., are just some of the practices that have been at the centre of attempts to dodge the goverment’s efforts.

Though the primary purpose of trade remedial measures is not to generate revenue for the government but provide a level-playing field to domestic industry versus global competitors, the above mentioned measures can lead to evasion or circumvention of duties, making a loss to the exchequer. Sometimes, anti-dumping measures do not seem to be making a difference when imported raw materials are used to make goods for exports and duties paid on such inputs are reimbursed and so they do not act as a deterrent for exporters.

However, where anti-dumping duties work effectively, they can help strengthen domestic industry, as is evident from the reduction in import dependence and augmentation of domestic production capabilities in some sectors.

However, where anti-dumping duties work effectively, they can strengthen domestic industry, as is evident from the reduction in import dependence and augmentation of domestic production in some sectors. Take alloy wheels, where huge capacities came up after India imposed anti-dumping duty. Now, it is an example of India’s potential as locally produced two-wheeler alloy wheels are cheaper than imported (mainly from China) wheels even without any anti-dumping duty at present.

“Today localisation in alloy wheels for two-wheelers must be to the tune of 60 per cent. We believe that in the next three years, this will be about 85 per cent. There is no anti-dumping on two-wheelers, but we have gained scale now,” says Ujjwal Kant Munjal, Managing Director, Rockman Industries, India’s largest alloy wheel maker for two-wheelers. Rockman has a capacity of 12.5 million such wheels per annum. “If the Chinese could do

it with size and scale, we can also do it, and that’s what we have done. The rest of the market put together, there are another 12 million (wheels) being manufactured in India. Scale and customer confidence is what matters,” Munjal adds. Recently, the company started manufacturing allow wheels for passenger cars as well. One of the triggers was the anti-dumping duty on alloy wheels for cars.

The current capacity of Indian companies is about four million passenger four-wheeler alloy wheels a year, just a fraction of China’s 120 million. But even that capacity came up only after the anti-dumping duty came into force. “Out of this four million, three million must have come up after the imposition of the duty. Once India starts producing 15-20 million wheels, we will be able to compete with them (China),” Munjal says.

This is where India needs its policies to aim at medium- and long-term goals of self-sufficiency. It’s a complex game with high stakes. How well is it working?

The ‘Others’A cursory look at import trends in the ‘others’ category shows that the government’s fear is not misplaced. In general, there has been an increase in not only the non-specified sections of each product group ever since India started increasing customs duties but also in the frequency of anti-dumping duty investigations over the last five years. The trend is consistent for both volume and value of imports.

“In every product group, one tariff line is the ‘others’ category, where imports are seeing a sharp increase. When it happens in products that carry a minimum import duty, as in case of steel, or anti-dumping duty, as in case of several chemicals, the decrease in imports of the targeted tariff line matches the increase in the ‘others’ category of the same product,” says Murali Kallummal,

Professor, Centre for Research on International Trade, Indian Institute of Foreign Trade, New Delhi.

While one may not be able to point out a single reason for this trend in imports, there is a strong possibility that products with high duties find their way into India through the ‘others’ category, thereby diluting the impact of fair trade measures. Therefore, there is a need to revamp the existing trade classifications for better transparency. “The HSN system (tariff codes) should be more disaggregated to handle this. We have to make products as disaggregated as possible, and preferably (named or classified) as used by the industry,” says Kallummal.

Ludhiana’s Mittal has some tips for the government in this regard. “Tariff is the biggest area for the government to get into. In textiles, for instance, knit fabric comes under one definition, but you can produce knit fabric at Rs 220 a kg and also Rs 780 a kg. The gap is huge. So, evasion happens not only on the basis of rate and quantity but also quality.” According to him, there should be a mechanism under which goods from a foreign country show their right value in the originating country. “Future free trade agreements should make it mandatory for the exporting country’s shipping bill to carry the cargo value. In that country, all the benefits given on exports should be based on the value of that shipping bill and not the invoice. If the value of the cargo is mentioned on the shipping bill and the same is used by the exporting country to reimburse taxes and the importing country to levy import duties, the problem will be solved,” says Mittal. He adds that an international e-way bill like the one India has can ensure fair trade and trade data at the same time.

Cause and EffectA.K. Gupta, Founder, TPM Solicitors and Consultants, which handles close


to 85 per cent of all anti-dumping cases on behalf of the domestic industries in India, says a quick analysis of 25 products where anti-dumping duties had expired till the end of 2019 shows mixed results. “In several cases, the performance of the industry improved as a result of the duties, due to which the DGTR (Directorate General of Trade Remedies, under the Ministry of Commerce) found it appropriate not to continue the duties. In some such cases, the domestic industries have been forced to file fresh applications as imports increased significantly post the expiry of the duties. For example, in case of nylon filament yarn, the expiry of the duty led to increased imports at dumped prices, affecting the industry,” Gupta says.

In fact, of all the 25 cases, at least 10 proved to be tough nuts to crack because despite duties, the sectors continued to be hit by the imports. These included aluminium road wheels, electrical insulators, nonylphenol, hexamine, acetone, and mostly products in the chemicals and petrochemicals category. In some cases, sunset reviews (SSR) to continue or increase the rate of anti-dumping duties were initiated, too. An SSR led to duty enhancement

and extension for Meta Phenylene Diamine, but in the case of some rubber chemicals, the duty was not continued and imports increased once it expired in early-2019.

Dumping of electrical insulators continued, but for a different reason. After the anti-dumping duty was imposed, Chinese producers started exporting polymer insulators, instead of glass and porcelain insulators, on which there was anti-dumping duty. The performance of the domestic industry improved for some time but gradually deteriorated when glass and porcelain insulators were replaced with polymer insulators.

There are success stories, too. The domestic makers of sodium nitrate made no request for extending anti-dumping duty on the product which is imported from the EU, China, Ukraine and South Korea. The duty imposed had restored the level-playing field for them. Gupta’s analysis also shows that anti-dumping duty was effective in case of steel wheels and a chemical and petrochemical product, 4,4 Diamino Stilbene 2,2 Disulphonic Acid.

In some cases, the domestic industry wants the anti-dumping duty to stay as gaining scale and strength against cheap imports takes time. This has resulted in an increase in the number of appeals for reviewing the sunset clause. “In 2018/19, a number of investigations were terminated without recommending any additional duty.

This was especially true in case of sunset reviews, in cases where investigations were not initiated or were terminated if the performance

of the industry had improved. But the authority should have examined if the performance would deteriorate in the absence of the duty. Since such industries felt that the duties should have been imposed or continued, it led to a number of findings being challenged,” says Gupta.

When a duty is imposed on a product, there can be various consequences - import from the very same sources may change, import of the same product from other countries may change, and import of downstream and upstream products could also be impacted. All four possible scenarios need to be carefully tracked to understand the dynamics of the trade flow in the anti-dumping context.

With India keen to discourage non-essential imports, understanding these factors can only help frame regulations that are more effective and can strengthen domestic manufacturing.

The Committee of Secretaries, meanwhile, is trying to formulate a strategy to control the import of products in the ‘others’ category. Commerce Minister Piyush Goyal is known to have asked the ministries with a high burden of such unspecified imports to identify at least 300 products, to begin with, to reduce the country’s import dependence while promoting local manufacturing. A March 2020 deadline is also in place.

Unless the government finds a magic wand, ensuring effectiveness of trade remedial measures will remain a complex and critical problem.

(Reproduced with permission from Business Today February 23, 2020)


Delhi’s air pollution falls in the category of “severe to emergency” with the Air Quality Index (AQI) for particulate matter (PM) hovering between 360 and 500. For a good AQI, a rating of 0-50 is required, which is hardly ever witnessed in the capital due to high emissions from vehicles, factories, etc. To bring down emissions, the Delhi government has been taking several measures pertaining to the transport sector.

Some of these are the introduction of BS-IV norms, an increased focus on electric and hybrid vehicles, and a shift to cleaner fuels. While vehicles are already being run on cleaner fuels such as compressed natural gas (CNG), the Supreme Court has now pushed for the use of a futuristic fuel called hydrogen-enriched compressed natural gas (H-CNG) to curb pollution further. Initially, the fuel will be pilot tested on around 50 CNG buses in the city. With this, Delhi will be the first city in the country to witness the roll-out of H-CNG buses for public use.

Piloting clean fuelIn August 2018, the Supreme Court directed state-owned Indian Oil Corporation Limited (IOCL) to take up a pilot project on public buses to assess the use of H-CNG to facilitate the

transition to cleaner fuels. To this end, in July 2019, IOCL, in collaboration with Indraprastha Gas Limited, laid the foundation stone for the first H-CNG production unit at Rajghat Depot 1 of the Delhi Transport Corporation (DTC). The unit, which stands completed, will produce 4 tonnes of compact reformer-based H-CNG for DTC buses every day. After the commissioning of the unit, the fuel will be pilot tested on around 50 BS-IV-compliant CNG buses for about six months to check its feasibility. The trials will be conducted by Anthony Road Transport Limited, which has been selected as the concessionaire for the cluster scheme.

Technology benefitsH-CNG is a futuristic fuel, which is produced using the compact reforming process wherein hydrogen-enriched CNG is prepared not by physically blending hydrogen with CNG but by spiking hydrogen in CNG. The technology has been patented by IOCL.

According to a report by the Environment Pollution (Prevention & Control) Authority (EPCA), the gas compact reforming process will partially reform the natural gas to provide a hydrogen-CNG mixture with 18 per cent hydrogen. The process is flexible as the machine can be installed at the

location where the gas is available and allows for the production of H-CNG based on demand. The fuel can then be compressed for direct use in motor vehicles and help reduce carbon monoxide emissions by at least 70 per cent and hydrocarbon emissions by 25 per cent. It is estimated that this compact reforming process is 30 per cent more cost effective as compared to the physical blending of hydrogen in CNG. According to the EPCA, the technology is extremely promising as it can be deployed in different locations, including at petrol pumps and bus depots. Moreover, it allows for the utilisation of Delhi’s existing CNG infrastructure, which comprises around 5,500 CNG buses.

ConclusionSo far, countries such as the US, Canada, Brazil and South Korea have conducted H-CNG trials. If the project is smoothly executed in the capital, Delhi will become the first Indian city to join the league of global cities using H-CNG. However, to fuel the existing fleet of around 5,500 CNG buses, around 400 tonnes of H-CNG will be required on a daily basis. For this, the setting up of four production plants of 100 tonne capacity each has been recommended. A capital investment of around Rs 3.3 billion will be required for this purpose. Moreover, H-CNG is rather expensive as compared to CNG, by an estimated Re 0.75 per km. However, the social benefits that it will bring to the city cannot be overlooked given the high levels of pollution. The Supreme Court has also pushed for a shorter time frame for enabling a faster switch to H-CNG. To make this transition smoother, timely approvals and setting up of stations will be key.

(Reproduced with permission from Indian infrastructure, February 2020)

Futuristic FuelCapital city gears up to test H-CNG in DTC buses


Contribution of the Chemical industry for economic growth in IndiaChemical industry, in the last hundred years, has grown rapidly and has substituted several other materials – giving a lot of design freedom to innovate. That is one of the major growth factors of this industry. For instance, if polyester was not invented, the world today would not have enough clothing options.

Hence, with all its innovations, chemical industry has grown fantastically at a much higher rate than the GDP. Even in advanced countries, chemical industry is continuously growing more than the GDP. For India, the growth

expectations for the chemical industry is similar and the chemical industry has always grown higher than the country’s GDP. In India, the manufacturing sector contributes 13 percent to the GDP, out of which chemical industry directly contributes 2/5th. Chemical industry is not a standalone industry; instead, we are a major contributor and enabler of every other industry. This means we are a feeder industry to other industries such as the automotive, pharmaceutical, dyes, textiles etc.

Hence, since the growth for chemical industry comes from all of these industries, we are not majorly impacted by the decline of any one particular industry as the growth is balanced with the rise in some other

World’s learnings get translated in India faster

Janardhanan Ramanujalu, Vice President & Regional Head, SABIC South Asia & ANZ.

Janardhanan Ramanujalu, Vice President & Regional Head,

SABIC South Asia & ANZ talks at length about the economic

development of India and the role that the chemical

industry plays in supporting this progressive growth.

Sh. Janardhanan Ramanujalu


Shivani Mody Chief Editor, Chemical Today

industry. For instance, currently the automotive industry is seeing a decline, but the growth of chemical industry is being balanced by other industries such as agriculture or pharmaceuticals. SABIC’s business portfolio of petrochemicals, specialties, agri-nutrients, and metals are serving strategic industries like electrical, medical devices, construction, packaging, automotive, agriculture and likewise, creating ‘Chemistry That Matters.’ At the macro level, for the next 20-25 years, the chemical industry in India will have a much higher growth rate in the manufacturing sector. However, it is time for the industry to ponder upon – whether we can continue to support with local supply at that level. India is hydrocarbon deficient - we have only about 10-15 percent of crude oil and 20-30 percent of the gas we need. Hence, our range of hydrocarbon choices is limited to import of crude oil or natural gas amongst clean fuels.

So far, we are lucky enough that India is surplus in refining, but going forward, this surplus will moderate due to emergence of EV. Therefore, we need to start being innovative to find ways of getting hydrocarbons feedstocks in India.

Today, almost 50 percent of the chloroalkyl (PVC) demand is imported by the country. The government is facing a big challenge to fulfill the need of country’s growth and increase manufacturing in India while also creating new jobs. Non-hydrocarbon (inorganic chemistry) is relatively easier but India has not invested enough in this sector. Silica is available in plenty in India, but there is not much innovation and investment in this segment. The Chinese, on the other hand are dominant in PV cells, LED glass etc.

Overall, chemical industry has a good future, although there are huge challenges in certain areas with heavy import dependency. India exports

$28 billion of chemicals to the world and is among the market leaders in pharmaceutical, dye, pigments, agrochemicals, complex molecules among other segments. We have our strengths, but we need to get the right investments done in the hydrocarbon sector. As SABIC is a global leader in many parts of our business, we look forward to continue our partnership with our customers in India, bringing our global expertise to drive India’s growth journey.

Growth sectors in India & Asia PacificAsia is the labour arbitrage hub. Textile manufacturing is much higher than the global average of 2 percent, In Asia, the sector is growing at around 10 percent. This is one segment which is specifically interesting for developing countries particularly India, which has a balanced fiber availability, cotton & polyester.

1) There are segments like pharmaceutical, health and manufacturing which will grow significantly in demand due to lifestyle changes and higher quality of life that people are opting and demanding for

2) Products which provide comfort, convenient, health and wellbeing due to changing life style choices are also growing faster. Some portfolios like mobile phones are growing at faster rate, and the consumption-based, construction-based and urbanisation-based products are following the growth trend.

3) There are products which are at the bottom of the pyramid like PVC pipes in rural areas for water, lighting and other necessities. All these products are actually growing faster because people are coming out of poverty faster. Hence, that sector is moving up and are demanding for product and services.

Market dynamics in developed vs emerging marketsThe world’s learning gets translated in India faster and we have avoided investments in many of the steps, but while we saved on investing in technologies, we also skipped on innovations in the journey. For instance, we are jumping from BSIV to BSVI to be in sync with the emission regulations adopted by the most advanced countries. The other such jump was in the phone technology wherein we went straight from landline to mobile and saved a lot of investments in that sector. We also stopped investing in CRT, paving the way to jump and start making investment into OLED.

So, while we benefited from skipping and jumping levels, we have also missed on creating ecosystems. For instance, we do not produce office automation and have become a net importer. We do not have an ecosystem for electronic hardware and hence we still depend largely on import of mobile phones and electronic gadgets rather than producing them in house and developing the market in India, likewise for TV manufacturing. The government is now encouraging the global mobile phone players to come and invest in India.

Benefits for chemical industry from Industry 4.0 revolutionIndustry 4.0 is a global phenomenon. It will come into India as we are a part of that global phenomenon. It is the transition that we have to work upon. In India, technology exists, but we should know if it is mature enough for the society to absorb, scale-up and run faster. Industry 4.0 is just about automating the processes and increasing the efficiency significantly with use of machine learning, AI etc. Increased efficiency will obviously come at the cost of growth.


Indian roadmap for the companyIndia is a very strategic market for SABIC. Our vision is to be a major player in India and have a major footprint here. We want to have a comprehensive presence in India, producing for India and for the world. We bring in global products, expertise and our technological strength to India, giving an opportunity to our Indian teams to gain from global exposure leading to skill development locally. We also export significantly from India. We sourced approximately Rs 400-500 crore worth of products from India. SABIC has also invested significantly in setting up a Technology & Innovation Centre in Bengaluru (STC-B). The centre was established with an initial investment of about $100 million and focuses on leveraging India’s research competencies. The state-of-the-art R&D facility has laboratories and advanced equipment that cannot be found anywhere else in India.

The facility employs around 300 scientists, engineers and designers, at the forefront of their fields across petrochemicals technology development, working together to innovate cutting-edge solutions to some of the biggest challenges facing society and industry today. The centre is well connected and integrated with other research centres of SABIC

globally and is a 100 percent export oriented unit. Further, the centre is a zero discharge facility and meets or exceeds it obligation towards its surrounding environment.

Sustainability InitiativesSustainability is at the core of everything we do at SABIC and is embedded in our product innovation and development processes. SABIC maintains its own sustainability strategy, which is duly reported in a transparent manner through the sustainability annual report. Further, we are committed to supporting the growth and development of a circular economy where products and raw materials are not wasted, but rather used to create new, valuable products. Towards this, we are planning to build a semi-commercial plant in the Netherlands to convert low-quality mixed-plastics waste – which usually end up in a landfill or incineration for energy – into feedstock for steam crackers to produce “circular” polymers. We expect commercial production to begin in 2021.

This is just one of many innovations that are being put into place over the next few years.

Another example of our dedication to sustainability is the CO2 purification plant at Jubail, Saudi Arabia. This facility can capture and purify up to

500,000 metric tons of CO2. The project shows how technology can reduce emissions, convert waste CO2 into valuable products, and increase operational efficiency. The purified CO2 is channeled through a network to other SABIC affiliates, where it is used in the production of useful products, such as urea for agricultural nutrients, liquefied CO2 for the food and drink industry, and methanol, a building block for many other chemicals that we use daily. The network enables SABIC to maximize resource efficiency by enabling integration between multiple sites.

In addition, SABIC has also introduced TRUCIRCLETM – range of flagship certified circular polymer solutions. They are groundbreaking product made from wholly recycled mixed plastic waste on display from consumer brand leaders including Unilever and Tupperware.

SABIC is also helping launch the Alliance to End Plastic Waste, a new global collaboration of 27 global companies to advance solutions to help reduce mismanaged plastic waste in the environment. The goal is for Alliance members to deploy $1.5 billion over the next five years to help end plastic waste in the environment and support the Circular Economy.

(Reproduced with permission from Chemical Today, February 2020)


DCM Shriram Ltd. organized a programme on Safe Handling of Chlorine at Kota on 12.02.2020. Mr. Abdul Saleem, Dy. Chief Inspector, Factories and Boilers, Kota, Rajasthan was presented as Chief Guest and Mr. Vijay Sharma, Sr. Environmental Engineer & Regional Officer, Rajasthan State Pollution Control Board was also presented as Guest of Honour.

About 100 participants incl. Chlorine Consumers, Transporters, Dealers were presented during the programme. Chlorine properties, manufacturing process, safe usage practices were explained in details through various presentations. Usage of Emergency Kits, Safe Practices, Gas mask etc. were also demonstrated.

Plant round including chlorine bottling facilities also taken along with them. Various questions/queries were also addressed. Progarmme was well appreciated by the participants.

Training Programme on Safe Handling of Chlorine

Senior dignitaries of the dias

A view of audiance


Mr. Subhash Tandon conducted a training workshop on 30.01.2020 at Finolex Industries located at Ratnagiri, Maharashtra.

Mr. Shreedatta Albur, Vice President-PVC Operations invited AMAI to conduct this Program for their Staff and for few others under their knowledge extension program.

Finolex Industries is the Pioneer Industry in the country manufacturing C-PVC and PVC Pipes and Fittings for Agriculture, Irrigation and Process Industry. The PVC Resins are used for making general purpose merchandise including consumer goods.

Finolex Industry Ltd. was incorporated in 1981 at Pune, Maharashtra as manufacturer of Rigid PVC Pipes.

Finolex set up a State-of-Art PVC Resin manufacturing Plant in 1994

near Ratnagiri on the West Coast of Maharashtra. This 130,000 MTPA was set up in technical collaboration with the then Uhde Gmbh-Germany Under technical license from Hoechest AG Germany. This plant manufactures Suspension Resin and Emulsion PVC Paste.

The present capacity of the Plant is around 260,000 MTPA of Resins. The complex is spread across 650 acres. This complex is self sufficient in more than one way. Good Housing Colony for Staff, Own Fire Fighting Infrastructure, School for the Children, Staff Club, Playground, etc.

This complex has established its private Open Sea Cryogenic Jetty for import of Ethylene, VCM, EDC and Coal. Finolex does not manufacture EDC at this facility. They import all EDC that they want for their operations. Imported Ethylene is used

for Oxy-Chlorination of Anhydrous Hydrochloric Acid generated in EDC Cracker.

The company operations are certified for ISO 9000-2015, ISO 14001-2015 and also for ISO 45001-2018 Standards. The Program was coordinated by Mr. Maruti Debe, General Manager, Fire and Safety and Mr. Teradesai Manager, HR Services.

The Program scheduled on 30.01.2020 covered the following:1. AMAI Activities and their

usefulness2. The Association has adopted a

focused approach for Safe and Secure Plant Operations and Maintenance for the industry, consumer units and other stakeholders.

38th Training Workshop

“Safe Handling of Chlorine and Emergency Preparedness”at Finolex Industries Ltd., Ratnagiri

Subhash Tandon Advisor Technical Services, AMAI

Training session in progress


A group photograph of the participants


The objective of AMAI for a safe & secure industry is obtained through conducting Training Programs, Promotion of Zero Alcohol Policy for Safe Transportation of Chlor-Alkali Products, Implementation of Chlor-Alkali Emergency Response Network, Development of Assisted Units and Creation of Pool of Safety Stewards to work as Agents for implantation Safety, Health and Environment Initiatives within their own Units.

3. Safe Handling of Chlorine during Handling of filled or empty Tonners/Cylinders

Finolex consumes around 2 MTPD of Chlorine for their VCM Facilities. The Chlorine is sourced from Century Chemicals -Thane.

Following points were covered during this session

a. Chlorine Tonner/Cylinder is never empty even if entire quantity of Chlorine has been consumed from the same.

b. Never put hot water /steam on the containers to evacuate entire quantity of Chlorine from the Containers.

c. Never put Water on the source of Chlorine Leakage. Never dump Chlorine Containers in Water Tank to mitigate Chlorine Leakage.

d. The logic behind filling Tonners/ Cylinders to 80% of their Volumetric Capacities and keeping chlorine tonners in horizontal and chlorine cylinder in vertical position always.

e. Chlorine Containers should be kept in the Sheds to protect the same from direct Sun and Rains.

There was specific query about the display of Emergency Information Panel on the Transport Vehicles. It was explained this is to convey the General Public, Dist. Administration, Fire Brigade, Medical Facilities and Rescue Teams about the nature of the Cargo loaded in the Vehicle. This is as per the Universal Standards. Chlorine Cargo Information Panel was

explained to the Participants.

HAZCHEM Code: 2XE

2: Stands for the type of fire extinguishing media to be used which is FOG for Liquid Cl2

X: Stands for PPE to be used which is fully encapsulated suit and usage of SCBA

E: Stands for evacuation during leakage of liquid chlorine

It is to guide and help these Agencies

to plan Rescue and Mitigation Plans when the need arises.

AMAI team visited Open Sea Cryogenic Jetty, Chlorine Consumption Facilities, Effluent Treatment Infrastructure and also General Round of the Plant on 31.01.2020.

All these Facilities are Operated and Maintained as per the Best Industry Practices. Chlorine Consumption Facility is exceptionally well maintained.

We had a brief interactive session with Mr. Albur Vice President, Mr. Venkatesh Ravi and few others to get their feedback on the Program conducted.

Mr. Sanjay S. Math Managing Director Finolex Industries was briefed about the deliberations we had during this Program, he appreciated the initiative of AMAI.

He desired AMAI should conduct more such Programs for Finolex Industries in future also. He was assured of our services as and when asked for.

What can you do?

This issue sponsored by

The only “SILLY” question is the one that has not been asked

http://www.aiche.org/CCPS/Publications/Beacon/index.aspxMessages for Manufacturing Personnelwww.aiche.org/ccps

February 2020

©AIChE 2020. All rights reserved. Reproduction for non-commercial, educational purposes is encouraged. However, reproduction for any commercial purpose without express written consent of AIChE is strictly prohibited. Contact us at [email protected] or 646-495-1371.

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A small word with a lot of Power – ASK!!

Did you know?

“I think this is the right valve – maybe I should ask the senior operator. No, he’s busy, I’m pretty sure it’s right.”“I am pretty sure this calculation is right, but if I ask, I’ll look stupid. I’ll just go with it.”“The ID number on this instrument is hard to read. It surely is the right one; I’ll take it off-line for calibration. The panel operator will tell me if it’s wrong.”

What’s the difference between what we “think” and what we “know?” – A LOT!! What we do is based on our experience (good or bad), and what we remember to be correct. That means there is a reasonable chance our actions could be wrong. Knowing means acting on what has been determined to be correct based on accurate information and procedures. And proper thinking, not guessing or assuming. It is better to delay the operation and confirm what is correct rather than proceeding and having an upset, spill, or worse.

CSB (Report No. 2016-02-I-LA, and a video) analyzes a fire following the release of isobutane during the attempted repair of a valve; the operators did not know the specific procedure for that valve and did not consider the possible hazards. The operators did not “know”.

Chemical operations require a high degree of operational discipline – doing the right thing the right way every time.

Industry has moved to computerized basic control systems; but this makes it even more important that people know what they are doing is correct.

No matter what job you perform, doing it correctly is important. Some errors are more detectable than others. If an error is less obvious or has no immediate consequences, it may go a while before it is discovered either by observation or by process deviation.

If you do not know, if you doubt, just ask! Looking stupid is less of a fault than causing an accident. Your question may produce benefits to others by review of training or reassessment of the problem you asked about.

Keep yourself informed about all procedures touching your job and follow them. If you see contradictions, remember the first point above

Respect the advice of those who point out where you may be wrong – it is help, not an insult. And when you see others about to make a mistake, ask them if they are sure they are doing it right.

How Does One Decide?

www.dekra.us/process-safety

NEWS DIGESTDonald Trump’s GSP gambit has worked in India’s favourHindustan Times| 29 Feb 2020

Indian exports to the United States of goods that were previously allowed in duty-free under a special trade scheme called the Generalized System of Preferences (GSP) increased in the six months after the Trump administration withdrew these benefits last June and sought to leverage their resumption to extract concessions, according to people familiar with the negotiations and parliamentary communications by the Modi government’s commerce ministry.

The unexpected growth in exports of these goods, which may or may not last in the long term, Indian negotiators had felt emboldened by the windfall, and less compelled, as a consequence, to concede ground in negotiations with American officials, who may have made it worse, Indians have argued, by constantly “changing the goalpost”.

“So far the cumulative exports under the GSP tariff lines have not declined in the post GSP withdrawal period (June – Oct 2019) as compared to the corresponding period of the previous year,” Union commerce minister Piyush Goyal told the Lok Sabha in response to a written question on December 11, 2019.

But the US plan was unravelling in the most unexpected way. The growth in the export of GSP goods, ranging between 3,500 to 3,800 different items, is understood to have gone up by 5.5% over the corresponding period, which is way more the 1.9% growth in overall Indian exports to the United States, according to people closely associated with India-US trade discussions.

It was not a uniform increase across the spectrum of good, those people said. Kitchen gadgets and equipment and gadgets, for instance, declined. But some others shot up noticeably. India exported processed foods, leather and gems and jewelry worth $783 million to the United States in 2018. The export of these goods jumped by almost 3.8% in 2019 between June, after the withdrawal of GSP benefits, and September, according to data cited by the commerce minister in a Lok Sabha reply.

GSP has been a key part of India-US trade. It accounted for $6.3 billion worth of Indian exports to the United States in 2018, which is a 12.1% of total Indian goods exports to the United States — a sixth. The total duty saved because of the scheme was $240 million. Indians were worried, more significantly, of losing American importers of their goods, which would be costlier now because of the newly imposed tariffs. Their buyers could dump them for other suppliers, it was feared.

But their importers stood by them by and large, leaving even Indians impressed by the “resiliency” of the demand for their goods. That the tariffs that went into effect after the termination of the GSP were not substantial and ranged between 0.25% and 8% also helped, according to the people familiar with these negotiations.

They conceded that the importers could be staying with their suppliers for now in the hopes of India being

restored the terminated benefits, which is a distinct possibility, as the key Indian demand for any future trade deal. In the unlikely scenario of that not happening they might switch to other suppliers to keep their costs down.

Biswajit Dhar, a professor of economics at JNU and former trade negotiator for India said, said there could be two factors contributing to the continued uptick and even growth of the erstwhile GSP goods. One, transactions between exporters and importers are sometimes bound by medium-term contracts and they will continue to do business till they run out or a reviewed. Two, there is a question of “substitutability”, if the importer can source these goods from somewhere else.

First leg of India-US trade deal likely in 3 monthsThe Economic Times| 26 Feb 2020

The first leg of the India-US trade deal will largely be about tariff concessions on goods and would be concluded in around three months. A larger free trade agreement (FTA) would be all encompassing, and include aspects other than goods such as services, intellectual property rights (IPR) and investment, officials said. The initial deal is likely to include restoration of benefits of low or zero duty to certain Indian exports under the Generalised System of Preferences (GSP), and market access for each other’s agricultural products.


As per an official, a limited scale trade deal will instill confidence in industry that things are moving forward till the time an FTA is finalised. Sources said the United States Trade Representative has begun the filing process to initiate FTA talks. The US Trade Promotion Authority requires the administration to notify Congress ninety calendar days prior to entering into a trade agreement.

Lanxess launches disinfectant for coronavirusHans India| 25 Feb 2020

Specialty chemicals company Lanxess, announced that Rely+On, disinfectant is effective against the coronavirus.

The product is used for hard surface and equipment disinfection.

Anneliese Bischof, Head of the Disinfectants Business at Lanxess said, “Following the outbreak of the coronavirus, we are seeing increased demand for Rely+On Virkon in China and other countries around the globe.”

Independent tests have proven that Rely+On Virkon inactivates a closely related surrogate of the currently spreading coronavirus strain. “From these tests it can be concluded that Rely+On Virkon is also effective against 2019-nCoV,” Bischof added. Laxness produces a wide range of scientifically based biocide technologies under the Virkon brand.

Competitiveness unchecked: The story of India’s exports and factors impeding growthThe Economic Times| 22 Feb 2020

India’s share in world exports has increased from 0.6% in 1991 to 1.7% in 2018 but remains paltry compared with China’s 12.8%. Moreover, the country’s exports have hovered around $300 billion since 2011-12.

POTENTIAL EXPORT DRIVERS• Rice• Oilcake, residue from soybean oil• Insecticides and similar products• Specified woven fabrics of cotton• Semifinished products of iron or

nonalloy steel• Structures and parts such as bridges

etc.• Spark-ignition or internal

combustion engines

• Certain motorcycles and cycles

Cos under supply pressure can invoke force majeure to bypass contractsThe Indian Express| 20 Feb 2020

The government on Wednesday said supply chain disruptions caused by the novel coronavirus (Covid-19) outbreak in China would allow companies to invoke force majeure clause — an extraordinary provision that allows them to wriggle out of liabilities in case they are unable to fulfill their contractual obligations.

The announcement comes a day after Finance Minister Nirmala Sitharaman met several industry representatives to take stock of the situation, announcing the government would “speedily” formulate measures to minimise its impact on sectors.

The move is a potential relief for companies facing difficulty in receiving shipments from China due to issues like shutdown of operations there or a hold-up at the ports in India.

According to Sitharaman, sectors like pharmaceutical, chemicals (such as paints and tyre manufacturing) and solar equipment were “very vocal” about disruptions in their supply chain.

The Indian industry is heavily dependent on China, especially for raw materials for various products sold here and exported to other countries.

China accounts for a “significant” share of the top 20 products that India imports from the world, according to an analysis paper by the Confederation of Indian Industry that was submitted to the Finance Ministry earlier this week. According to CII, this includes a 45 per cent share in India’s total electronics imports, a third of machinery and almost two-fifths of the country’s global organic chemical imports. India also sources about 65-70 per cent of active pharmaceutical ingredients used to make several medicines here as well as close to 90 per cent of certain mobile phone parts from China.

“With supply chains disrupted, many enterprises will face working capital shortages and be unable to meet their credit obligations. This will particularly impact smaller firms which can go under, leading to huge disruption in jobs and incomes,” stated CII’s analysis.

The industry body had proposed a “one-time emergency waiver” of NPA regulations under a force majeure clause “given the exigencies of the situation” to quell fears of the impact of the outbreak on credit ratings of enterprises.

Exporters not keen on GSP restorationThe Asian Age| 20 Feb 2020

Though the government is reportedly pushing the US administration for resumption of export benefits to domestic products under the US Generalised System of Preferences (GSP), the export sector is not too keen on having the benefits, withdrawn by the US last June.

Exporters rather look forward for positive steps towards a free trade agreement and tariff reduction on steel and aluminium exports. Commerce minister Piyush Goyal reportedly had several rounds of talks with US trade representative Robert Lighthizer over phone, demanding exemption from


high duties imposed by the US on certain steel and aluminium products, resumption of export benefits to certain domestic products under the GSP, and greater market access for products in sectors like agriculture, automobile, auto components and engineering. The Trump administration had imposed tariffs of 25 per cent on $761 million of steel and of 10 per cent on $382 million of aluminum imported from India.

As a developing country, India has been enjoying the benefits under US GSP programme since 1975. As part of the trade war that Trump has opened on multiple fronts, the US withdrew $260 million benefits to Indian products under GSP. While the export community was worried about the impact of the withdrawal in June, they are not pushing for its restoration during the upcoming Trump visit.

“Though the GSP benefits were withdrawn in June, the Indian exports to the US have grown in the second half of 2019 against the same period in 2018. Though there are a few export segments that have been hit by the GSP, overall there has not been any major impact of GSP on Indian exports to the US,” said Ajay Sahai, director general and CEO of the Federation of Indian Export Organisations.

According to him, India should pursue a free trade agreement or a preferential trade agreement with the US that will be beneficial for traditional export sectors like textiles and leather, especially at a time when there is a standoff between the US and China.

Coronavirus: Industry seeks cut in import duties to tackle disruptionsThe Tribune| 19 Feb 2020

The outbreak of the virus in China has hit India’s manufacturing and exports of medicines, electronic, textile and chemicals as China is the biggest source of intermediate goods, worth $30 billion a year, according to a

presentation by the Confederation of Indian Industry (CII).

Raw material shortage looms• India sources around 65-70% of

APIs and close to 90% of certain mobile phone parts from China

• The outbreak of the virus in China has hit India’s manufacturing and exports of medicines, electronic, textile and chemicals as China is the biggest source of intermediate goods

Indian Drug Manufacturers Association, which represents over 900 drug producers, said the industry was facing rising prices of raw material and supply shortages

“India sources about 65-70% of active pharmaceutical ingredients and close to 90% of certain mobile phone parts from China,” a presentation by another industry chamber, which represents more than 250,000 companies but did not wish to be identified, said.

Ratings agency Moody’s said on Tuesday that the coronavirus outbreak added to pressures on growth in Asia, with the impact felt primarily through trade and tourism, and for some sectors through supply-chain disruptions.

Response will be speedily announced to offset coronavirus impact on industry: Nirmala SitharamanThe Indian Express| 19 Feb 2020

With the novel coronavirus (covid-19) still hitting China’s operations across various sectors, the government has decided to “speedily” formulate measures to minimise the potential impact of the outbreak on its industry. Finance Minister Nirmala Sitharaman called for a secretary-level meeting to assess the various issues the outbreak poses to the Indian industry, known to be heavily dependent on the neighbouring country in several sectors.

The discussions centered around issues like requests for a “self declaration” system at Customs for various manufacturers to be able to receive the stocks of raw material that have arrived at the ports, but were stuck due to lack of the necessary paperwork from China.

Another issue raised was whether other countries can be explored as alternatives for sourcing raw materials, she said.

Some micro, small and medium enterprises had sought flexibility from banks, citing delayed and staggered raw material supply that had been impacting their ability to manufacture and send out their products, she said.

The current situation made a “strong case” for removing higher customs duties on certain products primarily sourced from China that may now need to be sourced from other countries, said an analysis paper by the Confederation of Indian Industry.

China accounts for a “significant” share of the top 20 products that India imports from the world. This includes a 45 per cent share in India’s total electronics imports, a third of machinery and almost two-fifths of the country’s global organic chemical imports.

Coronavirus outbreak may send earnings growth into a tailspinLive Mint| 19 Feb 2020

The coronavirus contagion is likely to curtail India’s earnings growth, triggering concerns about the market’s already high valuations. While the global infection rate of the virus is slowing, the virtual shutdown of the Chinese economy is expected to strike global growth and, with it, India’s earnings expectations.

India is already reeling under an economic downturn and the cut in corporate tax rates has so far failed to boost the earnings growth of Nifty


50 firms in FY20. Analysts expect the Nifty to report earnings growth of only around 10% in FY20.

Still, as markets are forward-looking, to that extent, net profit is expected to grow about 26% in FY21. What is worrisome is that earnings growth rates could be constrained by the impact of the coronavirus outbreak. This puts Nifty’s one-year-forward valuations at risk.

Electronics, consumer goods, chemicals, auto components and pharmaceuticals are seen as the most vulnerable sectors. India imports a bulk of its raw materials from China. While companies may have stocks for 45-60 days, a production disruption in the March quarter may not be acute. But if the contagion continues, June quarter production could be hit.

Scarcity of some raw materials will also lead to higher prices. Prices of some bulk drugs have already risen, which could squeeze margins in the coming quarters. Apart from manufacturing supply chains, commodity companies are at risk from the fall in prices of metals and minerals.

Sop withdrawal by US may not hit exports hardThe Times of India| 19 Feb 2020

Amid demands from Indian authorities for restoration of the generalised system of preferences (GSP) that allowed the levy of lower import duty on several products, latest data suggests that the withdrawal of the facility has not significantly impacted shipments from the country.

During June-December, India’s exports to the US went up by just under 2% to over $32 billion, data available with the US commerce department and the US Census Bureau showed. During this period, the value of goods that were covered by the GSP programme was estimated to have increased by 5.5% to around $7.5 billion. Effective June 5, the US had withdrawn GSP benefits for close to 2,000 items.

An analysis has shown that sectors such as auto parts, iron & steel and chemicals had in the past benefited the most from preferential import duties but are seen to be least resilient to the change.

The government, which has been negotiating a trade deal with the US, had sought a restoration of the benefit along with access for several goods. While talks had been on course, the US has raised fresh demands, which India is unwilling to accept. As a result, the prospects of finalisation of the much-awaited trade deal have dimmed during American president Donald Trump’s visit to India next week.

Decline in global merchandise trade volumes to continue for now: WTOBusiness Standard| 18 Feb 2020

The current decline in global merchandise trade volumes is expected to continue in the early months of 2020, as uncertain business conditions fueled by protectionism further reduce export orders in key sectors, the World Trade Organization (WTO) has said.

The global body’s Goods Trade Barometer (GTB) signaled further weakening of trade volumes in fourth quarter of 2019 and first quarter of 2020.

“World merchandise trade volume was 0.2 per cent lower in Q3 2019, relative to the same quarter in 2018 in line with expectations from the barometer index of November 2019,” the WTO said.

The GTB provides real-time information on the trajectory of world trade relative to recent trends. Its latest estimates showed a reading of 95.5, suggesting a further weakening after merchandise trade growth slowed during the first quarter of 2019. Readings of 100 indicate growth in

line with medium-term trends, while readings greater than and below 100 indicate above-trend and below-trend growth, respectively. The direction of change reflects momentum compared to the previous month.

The latest barometer reading is driven by further drops in container shipping (94.8) and agricultural raw materials (90.9), as well as the plateauing of growth for automotive products. However, the WTO said decline in export orders (98.5) and electronic components (92.8) appeared to be stabilising, and the weak performance of air freight (94.6) throughout 2019 seemed to have bottomed out.

Protectionism pangs• WTO says trade-restrictive measures

by G-20 nations remain at historic highs

• The same have shot up as the WTO’s dispute settlement court has become defunct since Dec

• For 2019, merchandise trade volumes forecasts have been sharply cut to 1.2% from 2.6%

Phase 1 of the US-China trade deal came into force on Friday with tariffs being cut on $195 bn of goods

Crude boost for India Inc as global oil demand dips over coronavirus epidemicLive Mint| 16 Feb 2020

The sluggish Indian economy and industries that are heavily dependent on crude oil such as aviation, shipping, road and rail transportation are likely to gain from a sudden drop in crude oil prices due to the coronavirus epidemic in China, the world’s biggest oil importer, said economists, chief executives and experts.

With various industries realigning their strategy amid energy demand forecasts being slashed due to the coronavirus outbreak, major oil importers such as India are seeking to drive a better bargain. India is the world’s third-largest oil importer and the fourth-


largest buyer of liquefied natural gas (LNG).

The oil market is currently facing a situation called contango, wherein spot prices are lower than futures contracts.

“Estimates by several agencies are suggesting that Chinese Q1 crude demand will be down by 15-20%, resulting in a contraction of global crude demand. This is reflecting in the prices of crude and LNG, which are both benign for India. This will help India in its macroeconomic parameters by containing current account deficit, maintaining stable exchange regime and consequently inflation,” said Debasish Mishra, partner at Deloitte India.

The International Energy Agency (IEA) and the Organization of the Petroleum Exporting Countries (OPEC) have cut global oil demand growth outlook following the coronavirus outbreak.

India is a key Asian refining hub, with an installed capacity of more than 249.4 million tonnes per annum (mtpa) through 23 refineries. The cost of the Indian basket of crude, which averaged $56.43 and $69.88 per barrel in FY18 and FY19, respectively, averaged $65.52 in December 2019, according to data from the Petroleum Planning and Analysis Cell. The price was $54.93 a barrel on 13 February. The Indian basket represents the average of Oman, Dubai and Brent crude.

Officials at the Indian Chemical Council, an industry body, said India depends on China for chemicals across the value chain, with that country’s share in imports ranging from 10-40%. The petrochemical sector serves as the backbone for various other manufacturing and non-manufacturing sectors such as infrastructure, automobile, textiles and consumer durables.

“A wide variety of raw material and intermediaries are imported from China. Though, so far, companies importing these are not significantly impacted,

their supply chain is drying up. So, they may feel an impact going forward if the situation does not improve,” said Sudhir Shenoy, country president and CEO of Dow Chemical International Pvt. Ltd.

This may benefit domestic producers of rubber chemicals, graphite electrodes, carbon black, dyes and pigments as lower Chinese imports may force end-consumers to source them locally.

Lower crude prices also bring good tidings to the government’s exchequer amid a revenue shortfall and a burgeoning fiscal deficit. Given the tepid growth in revenue collections, finance minister Nirmala Sitharaman, while presenting the Union budget, invoked the escape clause to take a 50-basis point leeway in the fiscal deficit for 2019-20, taking the revised estimate to 3.8% of GDP.

Concerned about the oil demand situation, Opec may advance its 5-6 March meeting, with its technical panel recommending a provisional cut to the Opec+ arrangement.

While the spike in crude prices due to rising tensions between the US and Iran was short-lived, the coronavirus outbreak and imminent output cut by Opec countries have introduced an element of uncertainty.

To be sure, a rebound in oil demand could again stoke prices that could fan inflation and hurt demand.

Coronavirus affecting exporters’ sentiment globally: FIEOBusiness Standard| 15 Feb 2020

The sudden spread of coronavirus in China has worsened the global sentiment, and exporters are delaying their shipments, says industry body FIEO.

According to the Federation of Indian Export Organisations (FIEO), exports declined 1.66 per cent to USD 25.97 billion in January, impacted by global and domestic factors. Other key factors,

including trade war, tension between Iran and the US and slowdown in economies across the globe, have also exaggerated the problem for India’s exports sector, he said.

Along with currency volatility, fluctuations in prices of commodities, including crude, have led to the nominal increase in exports of petroleum, which is a major constituent of India’s exports.

According to FIEO, only 10 out of the 30 major product groups were in positive territory during January, including electronic goods, drugs and pharmaceuticals, organic and inorganic chemicals, iron ore, oilseeds, ceramic products and glassware, man-made yarn/fabs/made-ups, cotton yarn/fabs/ made-ups, handloom products have shown some positive or nominal growth.

Virus may hit 28% Indian importsThe Times of India| 15 Feb 2020

The country’s construction, auto, chemicals and pharma sectors are expected to be the worst affected due to CoVID-19, which carries the risk of global supply chain disruptions. Five import items that are heavily dependant on China — electrical machinery, mechanical appliances, organic chemicals, plastics and surgical instruments — that make up about 28% of India’s import basket could be hit the most due to a potential shutdown, analysts say.

As a result, construction, transport, chemicals and machinery manufacturing could be affected, though the overall impact of COVID-19 on India’s trade is expected to be modest. There may not be much impact on the country’s exports as China accounts for just 5% of the country’s total outgo, but certain commodities like organic chemicals and cotton could face headwinds as they have a sizeable share in exports.

China accounted for around $73 billion, or 14%, of India’s total imports of $507 billion in FY18. China is the


biggest source for imports, though its contribution to India’s total imports is less than one-seventh. The coronavirus is likely to keep factories and industrial hubs in China closed beyond February 17 when the Lunar new year holidays end until the epidemic is brought under control, leading to extensive potential production losses.

Among imports, organic chemicals is likely to be among the worst-affected commodities due to the crisis. India imports close to 40% of its organic chemicals from China, while other sources — US and Singapore, also depend on China to varying degrees, says a note from ICICI Securities. India also imports 40% of its electrical machinery from mainland China, and with Hong Kong, its share goes up to 57%. Over half of India’s electrical machinery imports are likely to get impacted.

Goods exports dip 1.6% to $25.97 billion in Jan; trade deficit at $15.17 billionBusiness Line| 15 Feb 2020

The country’s goods exports posted a decline for the sixth consecutive month falling 1.66 per cent to $25.97 billion in January with high value items such as ready-made garments and gems & jewellery continuing to slide.

Imports for the month was a tad lower at $ 41.14 billion due to fall in gold and silver, coal and iron & steel imports. The trade decit in January was at $15.17 billion, almost at the same level as in January 2019, according to an offcial release circulated by the Commerce & Industry Ministry on Friday. Exporters’ body FIEO said the slowing down of the Chinese economy due to the coronavirus outbreak in that country added to persisting protectionism in most nations and liquidity concerns increased their troubles. “Only 10 out of the 30 major product groups were in the positive territory in

January and this included electronic goods, drugs & pharmaceuticals and organic & inorganic chemicals. However, all other major sectors of exports, including almost all labour-intensive sectors, are still in negative territory,” a statement from FIEO said. The country’s total goods exports in April-January 2019-20 was at $265.26 billion, 1.93 per cent lower than exports in the same period last year. Imports in the April-January 2019-20 period was 8.12 per cent lower at $398.53 billion. India’s exports touched a high of $331 billion last year posting a 9 per cent growth. The previous high was in 2013-14 at $314 billion. Since then exports have been fluctuating in response to a global slowdown.

Government has taken specific steps to boost exportsMillennium Post| 12 Feb 2020

The government has taken several steps, including tax refund scheme and enhanced credit to exporters, to boost outbound shipments, Finance Minister Nirmala Sitharaman said.

Replying to a debate on the Union Budget, Sitharaman mentioned six specific steps taken for improving the country’s exports.

She said that Remission of Duties or Taxes on Export Product (RoDTEP) scheme will replace the existing Merchandise from India Scheme (MEIS), which is considered as noncompliant to global trade rules.

The minister said textiles and all other sectors, which currently enjoy incentives up to 2 per cent over MEIS, will transit to RoDTEP. “In effect, RoDTEP will more than adequately incentivise exporters than the existing schemes all put together,” Sitharaman said, adding that now the concerns raised over withdrawal of MEIS is addressed. “I am making it plain that RoDTEP, which is now coming in, will

more than adequately compensate and incentivise exporters than all the existing schemes put together,” she added. Under the Foreign Trade Policy, MEIS was introduced in 2015. This incentivises merchandise/goods exports of over 8,000 items and it was the biggest scheme of its kind. Exporters get duty credits at fixed rates of 2 per cent, 3 per cent, and 5 per cent, depending upon the product and target country. The finance minister also said that in order to boost credit to export sectors, the RBI has enhanced the sanctioned limit to the eligible under priority lending norms.

“The limit has been raised from Rs 25 crore to Rs 40 crore per borrower. Furthermore, the existing criterion of units having a turnover of up to Rs 100 crore has been totally removed. So, it is applicable to anybody who wants to approach and take this priority sector lending,” she said. The government has also announced Nirvik (Niryat Rin Vikas Yojana) scheme to provide enhanced insurance cover and reduce premium for small exporters. She said this scheme will expand the scope of export credit and it will offer high insurance cover. “This will enable reduction in overerall cost of export credit, including interest rates speciality to the MSMEs,” the minister said. Further, Sitharaman said that the government has approved a sugar export policy for evacuation of surplus stocks during the sugar season 2019-20.

The minister also said that to enable handicraft industry to effectively harness e-commerce for exports, mass enrolment of artisans across India will be carried out in collaboration with the textiles ministry. She informed that the government has also amended SEZ law under which trusts are allowed to set up units in special economic zones. The country’s exports contracted for a fifth month in a row by 1.8 per cent in December 2019 to USD 27.36 billion. During April-December 2019-20, exports slipped 1.96 per cent to USD 239.29 billion, imports declined 8.9


per cent to USD 357.39 billion, leaving a trade deficit of USD 118.10 billion.

GSTIN made mandatory in export, import papersThe Asian Age| 10 Feb 2020

In a move to strengthen surveillance on evaders and plug revenue leakage in the goods and services tax (GST), the government has enhanced disclosure norms for exporters and importers from next week.

Importers and exporters will have to mandatorily declare GSTIN in documents from February 15 while exporters will need to mention additional information, including district of origin of goods, to the customs department from mid-Feb.

The government, however, said it would fine-tune its existing policies to increase outward shipments while also examine the loopholes of revenue leakage in the system.

According to a circular by the Central Board of Indirect Taxes and Customs (CBIC), certain cases have come to notice where the importer or exporter did not declare their GSTIN in the bill of entry/shipping bill despite being registered with GSTN.

GSTIN is a 15-digit PAN-based unique identification number allotted to every registered person under GST. While importers have to fill bill of entry with the customs department when importing goods, exporters have to file shipping bill.

Data analytics by the revenue authorities have detected rampant tax evasion through black market and under-valuing of imports. It has come to light that although importers are paying GST, they are supplying the goods without bill.

Importers typically pay integrated goods and services tax, or IGST, on goods they bring into the country. This tax is supposed to be set off against the

actual GST paid by the final consumer, or claimed as refund. But this is not happening in many cases.

A similar situation has been witnessed on cess charged on luxury and sin goods with companies paying it at the time of imports but not claiming credit or setting it off from final GST paid by consumers.

The data will be used for district-level plans for promoting exports as the commerce ministry has initiated a process to prepare a district export plan specific to every state and Union territory to boost exports.

RCEP return hope ebbs as India skips meeting in BaliFinancial Express| 07 Feb 2020

Dashing hopes for an early return to the negotiating table for the China-dominated Regional Comprehensive Economic Partnership (RCEP), India has skipped a meeting in Bali where its concerns on the mega regional trade deal were to be discussed, according to sources.

The Asean Secretariat had last month invited New Delhi to the Bali meeting, scheduled for February 3 and 4. India’s decision comes in the wake of China showing no sign of flexibility in its negotiating positions, not even through bilateral communications.

A senior Indian official told FE: “There is no point going to talks and investing resources when you know nothing substantial will come out of it. India’s main concerns were about potential dumping by China, and its proposals on critical issues, including safeguard measures and tough rules of origin, were not accepted. The ball is in China’s court now. Unless Beijing shows flexibility, the talks can’t move further meaningfully.”

Although the 15 other nations went ahead with the RCEP pact in November 2019, some of them were

keen to address India’s concerns. However, China’s willingness to consider its demands has fallen far short of New Delhi’s expectations. Most members wanted to conclude the negotiations in 2019 so that a formal RCEP deal could be formally signed in 2020.

Interestingly, at the Raisina Dialogue in January, external affairs minister S Jaishankar said India hadn’t shut its doors on RCEP: “Where RCEP is concerned, we have to look at cost and benefit. We will evaluate RCEP on its economic and trade merit. We have not closed our mind to it.”

However, some of India’s demands, such as the one for tough rules of origin, could be too hard for countries like China to accede to. Upon India’s insistence on the 35% value addition clause in the RCEP agreement, other partners, mainly China, wanted to limit the list of tariff lines with such a level of value addition to just 100. “India rejected such a short list,” a source had earlier said.

New Delhi feels without strict rules of origin, its different tariff concessions for different countries (the offers are least ambitious for Beijing) and safeguard/anti-dumping tools against any irrational spike in imports will be rendered meaningless. Even the Budget for 2020-21 last week reiterated India’s intention to tighten such rules.

To protect its industry, India had decided to trim or remove tariffs on Chinese goods only in phases over a period of 20-25 years. Similarly, its tariff concessions were to be the least ambitious for China — it offered to reduce or abolish import duties on a total of 80% of imports from China, against 86% from New Zealand and Australia, and 90% from Asean, Japan and South Korea.

Even without RCEP, India’s merchandise trade deficit with China stood at $53.6 billion in FY19, or


nearly a third of its total deficit, even without factoring in the deficit with Beijing-proxy Hong Kong. Its deficit with potential RCEP members (including China) was as much as $105 billion in FY19.

Govt. arms itself with powers to ban import or export of any itemLive Mint| 05 Feb 2020

The government has proposed to amend the Customs Act to give it wide powers to ban imports and exports of goods that may hurt the local economy, clearing the way for it to bar imports of cheap toys and firecrackers from China.

So far, the government had powers to only ban imports and exports of gold and silver under the Customs Act, 1962. Once approved, the amendment, through the Finance Bill, will expand the government’s power to ban imports or exports of all goods.

The government also proposes to amend the Customs Tariff Act of 1975 to strengthen the mechanism to prevent dumping of cheap goods in the domestic market.

“Section 8B (of the Act) is being substituted with a new section to empower the Central government to apply safeguard measures, in case any article is imported into India in such increased quantities and under such conditions so as to cause or threatening to cause serious injury to domestic industry,” according to government documents.

In May last year, India merged two separate bodies handling anti-dumping and import safeguards to form the Directorate General of Trade Remedies, similar to the US International Trade Commission, to create a trade defence mechanism that can respond to developments in a comprehensive and timely manner.

The government has recently initiated

more than 130 anti-dumping/countervailing duty/safeguard cases to deal with rising incidence of unfair trade practices.

The step is aimed at boosting domestic manufacturing and shielding domestic companies from cheap and sub-standard imports.

FICCI calls for national wastewater policyChemical Weekly | 04 Feb 2020

Ms. Naina Lal Kidwai, Chairman, FICCI Water Mission and Past President, FICCI has highlighted the need for a much stronger regulatory framework and suggested having a national wastewater policy. She also urged for greater corporate stewardship. “Water use efficiency is a key determinant in addressing both quantity and quality of water and for this, the circular approach towards water needs to be addressed at war footing to utilise water optimally across industry, agriculture and urban demands,” Ms. Kidwai added while speaking at the fifth ‘India Industry Water Conclave’ in New Delhi on January 24, 2020.

Dr. Mihir Shah, Chair, FICCI Water Awards and Chairman, Government’s Committee to Draft the National Water Policy, emphasized the need for active participation of primary stakeholders during the formulation of policy and regulatory measures for effective implementation. Mr. Gajendra Singh Shekhawat, Minister of Jal Shakti, Government of India, said that now the time has come to focus on supply side management of water conservation instead of just demand side management. “We have to ensure as to how we can reduce the water usage, recycle it and re-use it,” he added.

Highlighting the role of corporate sector in water management, Mr. Shekhawat said that government alone cannot solve the issue, hence all stakeholders including corporate sector should come forward. “I urge the

industry to come forward and invest in hydrological system and play an active role in promoting wastewater use,” he added. The 7th FICCI Water Awards were also presented on the occasion.

India exploring ways to source crude oil from Russia: Oil MinisterChemical Weekly | 04 Feb 2020

India is exploring ways to source crude oil from Russia, Oil Minister Mr. Dharmendra Pradhan said. “We are working on the strategy to diversify our crude oil supply sources and we are now exploring ways to import crude from Russia as well,” Mr. Pradhan told a Russian media delegation. Indian refiners have been seeking crude oil from different parts of the globe to reduce their dependence on the conflict-prone Middle-East region that currently makes up about 60 per cent of its imports. “We are keen to explore the new sea route to source crude oil and LNG through Russia’s Arctic. The route has the potential to cut the cost and time for transporting LNG from Russia to India,” Mr. Pradhan said.

Budget helps cut cost-of-credit, resolve pending issues of refunding taxes not under GST: ExportersBusiness Line | 01 Feb 2020

The Budget helps cut “cost of credit” while a new logistics policy can do away with infrastructure bottlenecks on the supply-side of overseas shipments, say exporters. The two major exporter organisations, FIEO (Federation of Indian Export Organisations) and EEPC (an apex body of engineering export), have also pointed at attempts made in resolving issues surrounding remission of duties or taxes not integrated under GST.

‘’The Budget has addressed two important policy aspects for exporters: Nirvik Scheme to lower the cost of export credit and the remission of


duties or taxes on export products for un-refunded taxes such as electricity duty and VAT,’’ said Ravi Sehgal, Chairman, EEPC India. According to Sehgal, the focus on manufacturing of medical devices through an Investment Clearance Cell will help enhance domestic capacity and exports. The duty increase could help curb cheap imports.

Cost of creditExporters refer to the ‘NIRVIK’ scheme as one that can help ease the lending process and enhance the availability of credit. The scheme comes at a time when there is fear of credit defaults (by exporters). “To achieve higher export credit disbursement, a new scheme, NIRVIK, is being launched, which provides for higher insurance coverage, reduction in premium for small exporters and a simplied procedure for claim settlements,” Finance Minister Nirmala Sitharaman said in the Budget. Under the scheme, the insurance over guarantee will cover up to 90 per cent of the principal and interest both on pre & post shipment credit. The ECGC (formerly Export Credit Guarantee Corporation Ltd) currently provides such a guarantee only up to 60 per cent of the loss to the banks. The premium for the coverage will also get reduced thereby beneting MSME exporters. This in turn is expected to enhance accessibility and affordability of credit to exporters, besides, lowering the provision requirement and liquidity due to quick settlement of claims ensuring availability of adequate working capital.

Refunds Exporters welcomed the new scheme to provide digital payment of taxes that have not been integrated under GST (such as electricity duty or products & services). Looking into issues of un-refunded taxes on petroleum products and electricity will help provide additional competitiveness to exports. It may also accentuate a move “towards zero rebating” (of exports). “While the scheme will be rolled out during the next financial

year, the fixation of rates for a large number of products will require an elaborate institutional mechanism. The scheme also has to be compatible with agreement on subsidies and countervailing measures of the WTO, so that exports are sustainable on a long-term basis,” said Sharad Kumar Saraf, President, FIEO. One district, one product The one district, one product can be a game changer for exports. Substantial exports can be targeted by focussing on the district level besides creating an export culture in India. Such a strategy will be extremely helpful for upliftment of artisans and craftsmen. “However, the scheme should be supplemented by forming a District Exports Council on the pattern of the US to make it an active partner in exports,” Saraf added. A national logistics policy along with district-level export hubs should give a boost to the sector. MSMEs will gain from initiatives such as eMarketplace and a unied procurement system. According to Sanjay Budhia, Managing Director, Patton Group, any interest equalisation should be made applicable for all exporters and not just MSMEs. This can go a long way to increasing the competitiveness of Indian exporters. He has also suggested that the the Foreign Trade Policy to be announced in April should look at creation of an Export Development Fund to help MSMEs. “The marketing support initiative of Ministry of Commerce is very small to support exports over $ 535 billion. We should create an Export Development Fund with a corpus of 0.5 per cent of country’s exports for helping the MSME exporters,” Budhia said.

Coronavirus impact: Gujarat dye intermediate industry feels raw material shortageFinancial Express| 26 Feb 2020

Gujarat’s chemical and dyestuff intermediate industry is feeling the heat of Coronavirus outbreak in China as nearly 800 odd units in the state

have been facing shortage of raw material.

If the supply is not restored soon, most of these units will not be able to function.

“Most of the units are already functioning at less than 50% capacity in Gujarat. These units are depending upon more than 50 Chinese dye intermediates including that of vinyl sulphone, h-acid, cyanuric chloride, j-acid etc. Majority of the units are on the verge of exhausting the stock of these important dye-intermediates. Since the outbreak of Coronavirus, supply has been stopped,” said Yogesh Parikh, president of Gujarat Dyestuff Manufacturers Association (GDMA).

Few dye intermediates are being manufactured by Indian companies, Parikh said, adding that in the absence of cheaper Chinese competition, the local manufacturers have increased the prices by two to three folds, which is unaffordable.

Situation would go from bad to worse from March even as Chinese suppliers would start sending shipments of dye intermediates from today itself as it took at least 45 days to reach cargo from China to India, he lamented.

With almost Rs 60,000 crore monthly turnover, Gujarat is having lion’s share of over 75% in India’s chemical and dyestuff industry. Mostly these units are spread across Ahmedabad, Vadodara, Ankleshwar and Vapi. Annual exports of chemical and dyestuff is exceeding Rs 50,000 crore.

45 chemical firms in Dombivli fined Rs 25 lakh each for pollutionThe Times of India| 25 Feb 2020

Maharashtra Pollution Control Board (MPCB) on Monday issued notices to 45 chemical companies in Dombivli MIDC for violating pollution norms, and told each to pay a fine of Rs 25 lakh.


The action came few days after chief minister Uddhav Thackeray visited Dombivli MIDC, after the colour of a river had changed due to pollution. Thackeray had warned companies polluting rivers to take safety measures or else they would be shut. Thackeray had also told officials to come up with a plan to deal with pollution in Dombivli MIDC.

The action has shocked industries in Dombivli MIDC, and they have decided to move court against MPCB’s order. A KAMA (Kalyan-Dombivli, Ambernath Manufacturing Association) member said, “The order is shocking, as MPCB, instead of taking action against those polluting rivers, is harassing everyone. We will move court against the order as we are not ready to pay the fine.”

MPCB and MIDC officials met over the Dombivli fire and Waldhuni river pollution issues, and submitted an action plan to the state government.

In the river case, MPCB served closure notices to seven companies releasing effluents without treatment. A senior MPCB official said the companies that were found to have released effluents in Waldhuni have been told to stop the discharge till further orders, which implies that they have been told to shut operations. “We have told them to stop discharge till MPCB certifies its quality, and the process of effluent treatment,” he said, pointing out that the penalty had been imposed on each of them for damaging the environment.

Meanwhile, sources said the main MIDC pipeline that carries effluents of these factories to the treatment plant, was also damaged, which was one of

the reasons for the pollution. The river had turned orange and later dark blue.

MPCB officers said a notice had been issued to the unit in Dombivili that went up in flames recently, to not resume operations till it is certified safe.

Farmers from Tamil Nadu delta welcomes government decision scrapping PCPIR planThe Indian Express| 24 Feb 2020

The state government’s announcement of scrapping the GO for the creation of the Petroleum, Chemicals & Petrochemicals Investment Region (PCPIR) zone covering Nagappattinam, Cuddalore has brought relief to farmers and activists in the delta. They, however, requested the government to the ban use of hydraulic fracturing technology in the delta districts, saying it was detrimental to ecology.

V Sethuraman, State resource person of the Tamil Nadu Science Movement, said the decision to cancel the GO for the PCPIR has demonstrated the Government’s intention to create the protected agriculture zone in a holistic way. These actions of the Chief Minister had created confidence among the public, he added. He, however, wanted the government to clarify on the status of projects that came into force prior to the announcement.

“From 2016 Vedanta, ONGC and IOC were awarded two, three and one blocks respectively in the delta for exploration. Licence was also granted for hydrocarbon exploration in Neduvasal and Karaikkal,” he said.

Shale gas is also a hydrocarbon and to produce this the use of hydraulic fracturing (fracking) is inevitable, Sethuraman said and pointed out that it was banned in several countries because it affected groundwater, and soil health. ‘Need clarification’ P Maniyarasan, coordinator of the

Cauvery Rights Retrieval Committee (CRRC) welcomed cancelling of the GO for PCPIR.

However he also wanted the Government to clarify whether Vedanta and ONGC would be allowed to go ahead with drilling exploratory oil wells at the 300 odd sites in the delta earmarked for the purpose. The State should clarify whether exploratory works for Hydrocarbon in the delta for which the Union Government had given nod would be allowed or not, Maniyarasan said.

The coronavirus has a silver-lining for Indian specialty chemicals after allLive Mint| 24 Feb 2020

India’s chemicals industry is warily watching the disruption to global supply chains due to the coronavirus outbreak, like the rest of the world.

But unlike others, the domestic specialty chemicals sector, notably custom producers, are seeing an opportunity in deepening relations with global companies and expanding supply contracts.

“The world is looking at de-risking their supply chains, which are fairly dependent on China. The chemicals sector in India has the opportunity for significant growth,” said Ashish Bharat Ram, managing director at SRF Ltd.

PI Industries Ltd, which generates a large chunk of its revenue from custom manufacturing, said it was seeing rising demand for existing products, andenquiries.Itisraising₹2,000crore through a qualified institutional placement (QIP) to fund expansions.

Environmental challenges and a clampdown on polluting industries in China and the disruption to supplies is forcing global companies to diversify their supplier base, benefiting India. This is reflected in acceleration in revenue at the top 10 specialty


chemicals companies in recent years, according to a study by Avendus Capital Pvt. Ltd.

Senators urge Trump Admin to ask India reduce hike in soda ash import dutiesPioneer| 08 Feb 2020

A bipartisan group of six Senators has urged the Trump administration to work with the Indian government to reduce its import tariff on US soda ash from 7.5 per cent to 5.5 per cent.

In a letter to US Trade Representative Robert Lighthizer, the Senators said that thousands of US jobs relied on the soda ash industry and keeping tariffs low will help US workers and economy nationwide.

The letter, dated February 3, was signed by Senators Mike Enzi, John Barrasso, Richard Blumenthal, David Perdue, Jeff Merkley and Ron Wyden.

In October 2019, soda ash producers in India recommended doubling the tariff on soda ash imports from 7.5 per cent to 15 per cent as part of the government’s ‘Make in India’ policies.

“It is vital to fair trade that the GOI reject this blatant protectionism,” the Senators wrote.

“A tariff reduction would principally benefit US exporters rather than other exporters such as those from China who produce more costly and environmentally-damaging synthetic soda ash. India’s history of restricting US soda ash should no longer be tolerated,” they said.

The Senators said natural US soda ash – which is a key component in glass, detergents and paper – is the most competitive and environmentally-friendly soda ash in the world.

About 58 per cent of US soda ash production is exported. According to the Senators, because of the global rise in environmentally conscious

policies and the thousands of US jobs dependent on soda ash, the US has prudent interests in keeping tariffs low with India and other nations.

Indian Hydrogen Market Projected to Grow to $727 Million by 2030Chemical Industry Digest| Feb 2020

India hydrogen market is projected to grow from an estimated $ 264 million in 2018 to $ 727 million by 2030, exhibiting a CAGR of around 9% during the forecast period, on account of growing demand for chemicals, expansion of refineries, and rising adoption of coal gasification and power-to-gas projects. Moreover, development of fuel cell technology for electricity production, increasing mergers & acquisitions and growing demand for hydrogen from hydro-processing industry and steel, chemical & petrochemical plants is anticipated to boost the country’s hydrogen market in the coming years. Some of the other factors that would aid market growth are government focus & growing R&D on using hydrogen as automotive fuel.

Reliance, Aramco accelerate refinery stake sale talksThe Indian Express| 19 Feb 2020

Reliance Industries Ltd.’s talks to sell a minority stake in its oil-to-chemical division to Saudi Aramco have been gathering pace in recent weeks, according to people familiar with the matter.

Aramco officials and bankers on the deal have been working at Reliance’s offices in Mumbai for due diligence this month, according to the people, who asked not to be identified as the information isn’t public. Both parties are trying to overcome differences over the deal’s structure, which had stalled the process last year, Bloomberg News previously reported.

Indian billionaire Mukesh Ambani’s Reliance is keen to sign a binding agreement before the next annual shareholders meeting, which is due to take place before the end of September, one of the people said.

Reliance in August valued its oil-to-chemicals division at $75 billion including debt, implying a $15 billion valuation for the 20% stake. If the deal closes at this value, it will be the largest transaction in India since Walmart Inc’s $16 billion acquisition of a majority stake in Flipkart Online Services Pvt For Aramco, the deal could be its biggest since agreeing to buy a majority stake in Saudi Basic Chemicals for $69 billion last year.

Ambani in August told shareholders that Reliance and Aramco had agreed to a non-binding deal for a 20% stake in the oil-to-chemical operations. But in December, the Indian government requested a court to stop the proposed sale to help ensure the Mumbai-based company has enough assets to pay arbitration claims in an unrelated case. A month later, Reliance’s joint chief financial officer V Srikanth told reporters that the transaction isn’t expected to be completed by March.

Reliance Industries eyeing Rs. 5,100-crore expansion at DahejChemical Weekly | 25 Feb 2020

Reliance Industries Ltd. (RIL) is planning to expand its Dahej Manufacturing Division (DMD), which produces a variety of petrochemical and downstream products, at a cost of Rs. 5,100-crore, according to an application submitted by RIL to the Environment Ministry.

The Dahej petrochemical manufacturing facility is proposing to set up the new plants and facilities, which includes manufacturing of ethylene dichloride (EDC), cyclohexane dimethanol (CHDM), polyethylene terephthalate (with a glycol modification) (PET-G),


establishing new incinerator in vinyl chloride monomer (VCM) unit, separation of hydrogen as a product in chlor-alkali plant and CO2 recovery unit in EO-EG unit. These plants will be located within the existing RIL DMD spread over 700 hectares.

EDC is used a raw material for manufacturing VCM, which is used in making polyvinyl chloride (PVC). According to the company, the proposed EDC plant will meet the raw material requirement of an initial plant, which will produce 500-ktpa of VCM/PVC. The DMD site is already making 360-ktpa of VCM/PVC and has approvals to build a new VCM/PVC plant of 1,200-ktpa capacity.

According to the application, DMD will produce 200-ktpa of PET-G post expansion of the facility. PET-G is used to make water bottles, food packets and other common plastic items.

The company will also produce 50,000-tpa of CHDM, a key raw material used for producing PET-G, as well as various other polymers.

Amidst a global shift towards renewable energy and electric mobility, RIL is implementing a strategy to transform itself from a primary producer of fuels to chemicals. The company is implementing an oil-to-chemical strategy that involves setting up crude-to-chemical projects adjacent to the existing Jamnagar refinery and petrochemical complex at a cost of Rs. 70,000-crore. The Jamnagar refinery, at the culmination of the oil-to-chemical transition, will only produce jet fuel and petrochemicals.

The company also plans to remove production bottlenecks at its flagship Vadodara Manufacturing Division (VMD) at a cost of Rs. 2,270-crore. RIL’s petrochemical production rose to 9.9 million tonnes (mt) during the

quarter ended December 2019, as compared to 9.7-mt produced in the corresponding quarter a year ago.

Meghmani ranked 490th in Fortune 500 listChemical Weekly | 18 Feb 2020

Meghmani Organics Ltd. has been ranked at 490th place in the ‘Fortune 500’ companies list, and at 48th place in ‘Top 50 Wealth Creators.’ The company has also emerged in the list of ‘Top 50 Wealth Creator Company’ at 48th place.

Reliance Industries to push use of waste plastic in road constructionChemical Weekly | 18 Feb 2020

Reliance Industries Ltd. (RIL), India’s largest petrochemicals player, is launching a project to use waste plastics in road construction.

India generates 9.4 million tonnes of plastic waste annually. Out of this, 40 per cent remains uncollected and 43 per cent is used for packaging, most of which is single use, a study conducted by Un-Plastic Collective, a voluntary initiative to curb plastic pollution, revealed last year.

Plastic waste can be turned into a cost-effective, durable and sustainable application in road construction, according to Mr. Vipul Shah, COO, RIL Petrochemicals.

“Plastic, when heated at an optimal temperature, acts as a binding agent for traditional road laying materials like bitumen. This mixture does not let water penetrate the roads, hence making them more durable,” informed Mr. KRS Narayan, the man heading the business development of sustainable solutions at RIL Petrochemicals.

Mr. Shah revealed that using 8-10 per cent of plastic waste mixture with traditional road laying material, can reduce the expenditure on road laying material by Rs. 1 lakh per kilometre of road. Over 86,000 tonnes of plastic can be used in the construction of roads countrywide. “This can be a game-changing project both for our environment and our roads,” he added.

The company resurfaced over 40 kilometres of roads in and around its Nagothane (Maharashtra) manufacturing division using plastic waste. The road weathered the 2,500-mm rainfall in previous year’s monsoon without any potholes. This success in the trial run, fuelled the R&D teams at RIL to dive further into what started as a CSR (Corporate Social Responsibility) initiative. The company recently announced the commercialisation of the sustainability initiative under the brand name ‘ReRoute’. The end product, which is the plastic waste mixture for road laying, will be sold to infrastructure project contractors and national road authorities.

“The texchnique of using plastic waste to make roads has been tried out by several players before, but the results were never satisfactory. At RIL, we tried to bridge the gaps that have inhibited the momentum of this process,” said Mr. Ajay Shah, President of the polymer chain. “We started our own, as well as outsourced garbage collection and segregation, which enabled us to obtain sufficient raw material. The shredding of plastic waste and making of the mixture by our skilled workers followed,” he added. Moreover, the end product eliminates the need for construction labour to relearn the process, as the road laying procedure remains the same.


To be published in the Gazette of India, Extraordinary, Part 1 Section 1F.No.6/3/2019-DGTR Government of India

Ministry of Commerce & Industry Department of Commerce (Directorate General of Trade Remedies)

4th Floor, Jeevan Tara Building, 5, Parliament Street, New Delhi – 110001

NOTIFICATION FINAL FINDINGS

Subject: Anti-dumping investigation concerning imports of “Chlorinated Polyvinyl Chloride (CPVC) Resin- whether or not further processed into compound”, originating in or exported from China PR and Korea RP.

A. BACKGROUND OF THE CASE Having regard to the Customs Tariff Act, 1975, as amended from time to time (hereinafter also referred to as “the Act”) and the Customs Tariff (Identification, Assessment and Collection of Anti-Dumping Duty on Dumped Articles and for Determination of Injury) Rules 1995, as amended from time to time (hereinafter also referred to as “the Rules”) thereof.

1. M/s DCW Limited and M/s Kem One Chemplast Pvt. Ltd. (hereinafter also referred to as the “Applicants”) filed an application before the Designated Authority(hereinafter referred to as the Authority) in accordance with the Customs Tariff Act, 1975 and Anti-Dumping Rules, for initiation of anti- dumping investigation concerning imports of “Chlorinated Polyvinyl Chloride (CPVC) Resin - whether or not further processed into compound (hereinafter also referred to as the “subject goods” or “product under consideration”) from China PR and Korea RP (hereinafter also referred to as the “subject countries”).

2. The Authority, on the basis of sufficient evidence submitted by the Applicants, issued a Notification No. 6/3/2019-DGTR dated 28th March, 2019, published in the Gazette of India, initiating the subject investigation in accordance with Rule 5 of the AD Rules to determine existence, degree and effect of the alleged dumping of the subject goods, originating in or exported from subject countries and to recommend an amount of antidumping duty, which, if levied, would be adequate to remove the alleged injury to the domestic industry.

3. The Authority having regard to the Act and the Rules, considered it appropriate to recommend interim duties and issued preliminary finding vide Notification No. 6/3/2019-DGTR dated 12th July 2019, recommending imposition of provisional anti-dumping duties on the imports of the subject goods, originating in or exported from China PR and Korea RP. Accordingly, the Central Government vide Notification No.33/2019-Customs dated 26th August, 2019 imposed provisional anti-dumping duties on imports of the subject goods, originating in or exported from the China PR and Korea RP which are valid for 6 months.

Recommendation: 119. The Authority notes that the investigation was initiated and it was notified to all interested parties. Adequate opportunity was given to the exporters, importers and other interested parties to provide information on the aspects of dumping, injury and causal link. Having initiated and conducted an investigation into dumping, injury and the causal link thereof in terms of the Rules and having positive dumping margin as well as injury to the domestic industry caused by such dumped imports, the Authority is of the view that imposition of definitive anti-dumping duty is necessary to offset dumping and injury.

120. Having regard to the lesser duty rule, the Authority recommends imposition of definitive anti-dumping duty equal to the lesser of margin of dumping and margin of injury, so as to remove the injury to the domestic industry. Accordingly, the Authority

19th February, 2020


recommends imposition of definitive anti-dumping duties on the imports of the subject goods, originating in or exported from the subject countries, for a period of five years, from the date of notification to be issued in this regard by the Central Government, as the difference between the landed value of the subject goods and the amount indicated in Col 7 of the duty table appended below, provided the landed value is less than the value indicated in Col 7. The landed value of imports for this purpose shall be the assessable value as determined by the customs under Customs Tariff Act, 1962 and applicable level of custom duties except duties levied under Section 3, 3A, 8B, 9, 9A of the Customs Tariff Act, 1975.

Duty Table

S.No. HS Code Description of goods Country of origin

Country of Export Producer Specification Amount in USD/MT

1 2 3 4 5 6 7

1 39042110 39042190 39042210 39042290 39041090 39049000 39049010

Chlorinated Polyvinyl Chloride Resin (CPVC) - whether or not further processed into compound

China PR Any country including China PR

Shandong Gaoxin Chemical Co Ltd

CPVC Resin 2,087


CPVC Compound

2,717

2 China PR Any country including China PR

Shandong Pujie rubber and plastic Co. ltd

CPVC Resin 2,053


CPVC Compound

2,853


Shandong Xiangsheng New Materials Technology Co., Ltd.,

CPVC Resin 2,045


CPVC Compound

2,853


Weifang Sundow Chemical Co. Ltd

CPVC Resin 2,025


CPVC Compound

2,853


Shandong Xuye Materials Co. Ltd

CPVC Resin 2,057


CPVC Compound

2,657


Any Producer other than mentioned above

CPVC Resin 2,161

CPVC Compound

2,853

7 Any country other than China PR and Korea RP

China PR Any CPVC Resin 2,161

CPVC Compound

2,853

8 Korea RP Any country including Korea PR

Any Producer CPVC Resin 2,024

CPVC Compound

2,853

9 Any country other than China PR and Korea RP

Korea RP Any Producer CPVC Resin 2,024

CPVC Compound

2,853

XV. Further Procedure 121. An appeal against this notification shall lie before the Customs, Excise, and Service Tax Appellate Tribunal in accordance with the Customs Tariff Act, 1975.

(Bhupinder S. Bhalla) Additional Secretary & Designated Authority


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12 Foreign Investment Promotion Board (FIPB) Approvals (US$ Million)

13 Foreign Exchange Reserves (US$ billion)

14 Fiscal Deficit (Apr 2019-Jan 2020)

15 Purchasing Managers Index (PMI)

1 Alkali Imports (MT)

KEY INDICATORS JANUARY 2019Qty (Jan 2020) Qty (Jan 2019) % Difference

(Y-o-Y)Qty (Dec

2019)% Difference

(M-o-M)FY 2019-20 (upto Jan)

FY 2018-19 (upto Jan)

% Difference Total Imports 2018-19

Caustic Soda 35,927 3,600 898.0% 34,385 4.5% 312,623 219,826 42.2% 235,364

Soda Ash 64,185 90,184 -28.8% 65,603 -2.2% 817,556 717,834 13.9% 838,464

Average Price in Dec 2019: Caustic Soda - 295 USD/MT (Lye) & 409 USD/MT (Flakes); Soda Ash - 243 USD/MT

2 Foreign Trade - Merchandise (US$ billion)

Jan 2020 Jan 2019 % Difference FY 2019-20(upto Jan) FY 2018-19(upto Jan) % Difference Total Imports 2018-19

Imports 41.1 41.5 -0.8% 398.5 433.8 -8.1% 507.4

Exports 26.0 26.4 -1.7% 265.3 270.5 -1.9% 331.0

Surplus/Deficit -15.2 -15.1 -133.3 -163.3 -176.4

Jan 2020 Jan 2019 % Difference

Mining 124.3 119.1 4.4%

Manufacturing 137.6 135.5 1.5%

Electricity 155.6 150.9 3.1%

Jan 2020 Dec 2019 % Difference

Net Foreign Direct Investment

5,668 3,882 46.0%

Net Portfolio Investment

-227 10 -2370.0%

Total 5,441 3,892 39.8%


Chemical & Chemical Products 125.3 123.7 1.3%

Textiles 122.0 118.2 3.2%

Paper & Paper Products 92.7 100.7 -7.9%

Basic Metals 166.6 146.0 14.1%


India NA NA NA

Russia NA 108.6 NA

Brazil 95.8 95.9 -0.1%

European Union (28) 104.4 106.1 -1.6%

USA 104.9 105.8 -0.8%

3 Exchange Rate (Rs./USD)

9 All India Inflation Rates (Base: 2012=100)

10 Consumer Price Inflation - Industrial Workers (Base: 2001=100)

11 Foreign Investment Inflows (US$ Million)

4 Index of Industrial Production (Base: 2011-12=100)

5 Index of Core Industries (Base: 2011-12=100)

6 Index of Industrial Production - Broad Sectors (Base: 2011-12=100)

7 Index of Industrial Production - Manufacturing Sub-groups (Base: 2011-12=100)

8 Index of Industrial Production Country-wise Comparisons (Base: 2015=100)

Jan 2020 Dec 2019 Nov 2019

71.31 71.19 71.45 Jan 2020 Jan 2019 % Difference

150.2 139.6 7.6%


330 307 7.5%


137.1 134.4 2.0%


137.5 134.5 2.2%

Jan 2020 Dec 2019 Nov 2019

24 45 58

Jan 2020 (as on 31 Jan 2020)

Dec 2019 (as on 27 Dec 2019)

% Difference

471 457 3.0%

Jan 2020 Dec 2019 Nov 2019

55.3 52.7 51.2

% of Actuals to Budget Estimates FY 2019-20

% of Actuals to Budget Estimates FY 2018-19

128.5% 121.5%

Index over 50 shows expansion, while below 50 means contraction

Data Source: GOI, OECD, IHS & AMAI Research


engineering. tomorrow. together. thyssenkrupp

It’s a matter of pride for us to recount our group’s association with the Caustic Soda-Chlorine industries across the globe. An association that dates back to 5 decades, covers 500 plants, and accounts for a staggering 40 million tonnes of Caustic Soda. It therefore comes as no surprise that our customers repose their unfailing trust in our capabilities - be it a grassroots Membrane Cell Caustic Soda Plant, or a Conversion / Expansion project.

The reason lies in what we offer our customers-cutting-edge Electrolysis technology and state-of-the-art Membranes - backed by the customary quality and attention to detail that we bring to our engineering and plant implementation - all under one roof!

Sometimes, as they say, you don’t have to look far for the reasons for success. You can find it in the numbers.

500 and still counting!Industrial Solutions

Published by ALKALI MANUFACTURES ASSOCIATION OF INDIA 3rd Floor, Pankaj Chambers, Preet Vihar Commercial Complex, Vikas Marg, Delhi 110092 Ph: 011-22432003, 22410150 Email:[email protected]; [email protected]; website: www.ama-india.org

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