Cheap Chinese Imports Hit Gujarat Chemical Industry Hard - Vibes Of India

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Cheap Chinese Imports Hit Gujarat Chemical Industry Hard

| Updated: November 24, 2023 12:26

Chinese products are hitting hard the chemical industries of Gujarat. With their cheap products invading India and the world, the Indian manufacturers are finding it hard to compete in the international market even as their domestic prospects are also down with everyone wanting to buy cheap.

According to sources, some finished products are being supplied at par with raw material prices by China while many have very less price difference.

India’s chemical trade deficit has also increased to $17 billion in 2022-23 which had a trade surplus of $3 billion in 2020-21. China is lowering its inventory before its new year season and it may further affect prices.

Factories in Gujarat manufacturing the chemical MPDSA are shut for more than a year because of the competition from China. Industry associations say that China has huge capacity and it is dumping products in India and Europe at cheaper rates even when actual demand is sluggish.

Acetanilide, for instance, is manufactured using aniline and China is currently supplying both products at the same price. This means that Indian manufacturers cannot compete with China for acetanilide, which is used in pharma intermediates and specialty chemicals.

In India, the industry buys benzene at around $920 per tonne to manufacture aniline and with other raw materials, electricity and labour, production cost is around $1,700 per tonne but China is supplying aniline at $1,400 per tonne in India. According to Assocham data, the chemicals sector accounts for 7% of India’s GDP and its share in India’s merchandise export is 13%.

According to 2022 data, China exported $300 billion worth chemicals while India’s chemical export was just $65 billion in the global market. Gujarat is the hub of India’s chemical industry with a 35% share in the country’s chemical and petrochemical exports and 41% share in India’s chemical production.

Gujarat has a turnover of $31.5 billion in chemical industry. Chemical is the largest contributor to Gujarat’s industrial output with more than 24% share.

Production of tobias acid is stopped in India for some years and for more than one year, around 10 local factories producing MPDSA are also shut because Indian manufacturers are not able to match pricing of China, though India’s chemistry is older than China.

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