In an interview, Anil Kumar, President, Alkali Manufacturers Association of India (AMAI) and President, DCM Shriram Ltd with Chemical Today magazine tells about the alkali and chlor-vinyl industry in India.
By Shivani Mody
Evolution of the Alkali and Chlor-Vinyl industry in India.
The Indian caustic industry is a well established mature industry with a capacity of 34 lakh MTPA (caustic soda) and having a total turnover of about Rs 7,000 crores annually. The industry comprises 34 manufacturing units, provides employment to about 1.5 lakh persons (direct and indirect) and contributes over Rs 100 crores to the exchequer by way of duties and taxes. The entire industry is ISO 9001 compliance with most units certified for ISO 14001 and OHSAS 18001. Starting from a small diaphragm cell plant in 1946 at DCM Chemical Complex, Delhi the industry moved to the next level of mercury cell and is now fully converted to the “green” membrane cell technology.
The Indian soda ash industry comprises five producers having a turnover of about Rs 5,000 crores annually. Nearly 95 percent of the soda ash capacity is concentrated in Gujarat. The first soda ash factory in India was started by DCW way back in 1925 at Dhrangadhra in Gujarat. The industry has witnessed consistent growth and now caters to over 90 percent of the country’s requirements.
The PVC industry comprises 8 manufacturing units having an annual turnover of about Rs 8,000 crores. The industry is compliant to ISO 9001 and various international standards and contributes over Rs 110 crores to the exchequer by way of duties and taxes. The first PVC plant with an annual capacity of 6000 tonnes was set up by Calico Mills Ltd, Mumbai in 1961. The industry witnessed impressive growth over the next four decades. However, with a drop in import duty levels in the mid-2000s, capacity addition significantly lagged behind demand.
Advantages of the Alkali and Chlor-Vinyl industry for the country.
The Indian alkali industry is regarded by global peers as among the most efficient, eco-friendly and progressive industries. It is to the industry’s credit that its constituent units had taken a unified stand to move ahead of other countries in phasing out mercury and adopting the latest energy-efficient and eco-friendly membrane cell technology for producing caustic soda.
The soda ash industry has been showing consistently high performance with some of the plants receiving recognition for best practices. The industry has the capability to meet the growing demand and has announced expansion plans to keep pace with an increase in domestic consumption in the coming years.
The chlor-vinyl industry, though constrained by capacity, is highly efficient and remains committed to adopting progressive measures.
The measures taken by the chlor-alkali industry has enabled India to achieve milestones much ahead of most other countries. For example, though the Minamata Convention on Mercury (of which India is a signatory) mandates phasing out mercury for caustic soda production by 2025, the Indian industry achieved this last year itself. This is an achievement for the country.
The entire Indian alkali industry has phased out mercury cell process and adopted the latest eco-friendly and energy-efficient membrane-cell technology for manufacturing caustic soda, the second country after Japan to do so. Information regarding the technology.
The entire Indian alkali industry is now in the latest membrane cell technology. This technology eliminates the use of mercury and is also energy efficient, consuming less power compared to the earlier technology. In terms of effluents, the environment ministry has recognised that brine sludge from membrane cell caustic soda plants is non-hazardous. This is a big change from the earlier position when the sludge from mercury cell technology was to be confined to secured sites and monitored. This also concomitantly offers the opportunity for exploring the waste sludge for various uses.
Ways in which Alkali and Chlor-Vinyl industry in India are moving towards eco-friendly and energy-efficient solutions.
As mentioned earlier, the entire industry is ISO 9001 compliant and most units are also certified for ISO 14001 and OHSAS 18001. The chlor-alkali industry was among the sectors covered in the Perform, Achieve & Trade (PAT) Scheme of the Bureau of Energy Efficiency (BEE), which is under the Ministry of Power. The industry achieved its target set for PAT Cycle 1 that ended on 31 March 2015.
The entire industry has been compliant to the various norms set by the environment ministry. In a way, we can say that the Indian alkali industry is among the greenest segments of the Indian chemical industry.
The soda ash industry has consistently achieved distinction among chemical industry peers. The thermal power plants in these industries have also out-performed their peers in other sectors in terms of plant load efficiency as well as recycling waste.
The chlor-vinyl industry is also similarly placed, with a very high level of compliance to domestic and international norms in terms of efficiency and eco-friendly approach.
AMAI is the first chemical industry association in India to launch a dedicated toll-free helpline for handling Chlorine Emergencies. Give us an idea regarding the Chlorine Emergencies and safety measures & precautions for manufacturers.
Chlorine is a very versatile but hazardous chemical. There are adequate safety measures in place in all manufacturing units. However, a challenge that remained unaddressed was the inadequate safety measures during transportation and use at the consumers’ end. The industry took an initiative and in 2013 launched a dedicated helpline to attend to emergencies that arise during transportation and use. The toll-free number 1800-11-1735 can be accessed from anywhere in India and when dialled, the call is forwarded to the nearest control room of the chlor-alkali manufacturing plant. An emergency team that is always available in these plants is then dispatched for emergency mitigation.
AMAI has also been regularly conducting training programmes for transport crew, fleet operators and user industries. These programmes are conducted with support from the Department of Chemicals and Petrochemicals, GoI as a service to the industry. So far, AMAI has trained over 1500 people on safe handling of chlorine and tackling emergencies. The chlorine emergency network is also being integrated into the disaster response management system at the centre and state levels.
AMAI has also published literature, including leaflets and handouts, on chlorine that is distributed to anyone who is connected with the handling and use of chlorine.
Growth potential of the Alkali and Chlor-Vinyl industry in the coming 2 to 5 years.
Alkalis and PVC are basic building blocks that find applications in products of everyday use including aluminium, paper, textiles and plastic. With growing aspirations of a rising middle class, higher disposable income and currently low level of penetration, demand for these products (and therefore the building blocks) is bound to grow. There is a vast untapped market, especially in the rural areas which will significantly drive demand.
To illustrate, India has a low per capita consumption of 1.85 kg caustic soda, 2.3 kg soda ash and 2 kg PVC compared to 32 kg, 28 kg and 12.7 kg in the US and 12 kg, 11 kg and 10 kg in China for caustic soda, soda ash and PVC respectively.
The ‘Make in India’ programme of the Indian government can provide a fillip to domestic manufacturing and value addition provided the right ecosystem is put in place to bring in investments and augment domestic manufacturing capacity. In fact, unless our government and industry join hands to significantly add to domestic production, we will end up losing a great opportunity and offering the Indian market to a flood of imports. The Indian growth story is on every country’s radar and the onus is on us to tap this potential.
Challenges faced by the Alkali and Chlor-Vinyl industry.
The Indian alkali industry faces four major challenges:
(a) Steep power costs
The chlor-alkali industry is power-intensive and the industry has invested substantially in setting up captive power plants due to undependable and expensive grid power. Instead of supporting the industry on this, state governments have imposed electricity duty and cess on captive power generation. These are non-vatable and so add to overall power costs.
(b) Unfair competition from low-cost countries
Power costs constitute nearly 60 percent of the overall cost of production. With power costs in India relatively high, the domestic industry is at a disadvantage when compared to many countries from which imports come in, especially the Gulf.
(c) Inadequate trade protection measures
This results in unregulated imports and low capacity utilisation of the domestic industry. About 20 percent of demand is met through imports and to this extent, the domestic capacity utilisation is truncated.
(d) Lack of credible sink for chlorine
Chlorine, co-produced with caustic soda, has limited use and cannot be stored or transported in large quantities. The chlorine derivatives industry in India is still developing and not large enough to drive demand. This, in turn, retards the production of caustic soda.
The Indian chlor-alkali industry invested substantially (over Rs 5,000 crores during the last ten years) to phase our mercury cell technology and adopt membrane cell technology. However, despite this distinction, imports of caustic soda based on mercury cell technology continue unregulated. This is a distinct disadvantage to the domestic industry, whose progressive measures the government should recognise by restricting imports of the inferior caustic soda. The domestic industry’s serious concerns on this remain unaddressed. Restricting imports on this basis alone will provide some level-playing field to the domestic industry.
Challenges of the soda ash industry
The Indian soda ash industry has adequate capacity to fully meet domestic demand. However, countries with huge surplus capacities have been finding an easy access to India for dumping their produce. As a result, the Indian industry has been facing a challenge of under-capacity utilisation. The availability of raw materials had prompted almost the entire capacity to be concentrated in Gujarat. However, the infrastructural challenges of freight on a delivery of soda ash produced takes away the locational advantage of the manufacturing plants. The problem is further accentuated by unfair freight comparison with imports in evaluating the injury to the domestic industry.
Challenges of the Chlor-Vinyl industry:
Availability of feedstock for the vinyl chain is a major challenge. Domestic manufacturers have to largely depend on imports of feedstock and intermediaries. The relatively low import duties on PVC also do not offer adequate margins to attract investments. The duty differential between intermediaries (EDC and VCM) for producing PVC and imported PVC does not offer an advantage for domestic value addition.
The country today imports nearly 50 percent of PVC to feed its domestic demand. With demand increasing at about 10 percent annually (the demand during 2015-16 was 2.7 million MT), the import dependency will only increase unless investments for capacity addition come in. This level of import is surely unsustainable.
The demand for PVC will continue to grow, driven by rising agriculture and infrastructure needs. The government’s Smart Cities Project will boost demand for pipes for water and wastewater delivery and flooring/ profiles in construction. The per capita PVC consumption in India is only 2 kg compared to 11.8 kg in the US and 10 kg in China. This indicates an enormous potential for growth.
Globally about 40 percent of chlorine goes into the vinyl chain. In India, only about 8 percent of chlorine goes into the vinyl chain. A robust PVC industry will drive demand for chlorine, which in turn, will also improve the availability of domestically produced caustic soda.
© Chemical Today Magazine
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