The bilateral trade between India and the United States in goods and services grew by more than 10% per annum over the past two years to reach US $142 billion in 2018-19. Specifically, in the chemical sector, major US manufacturers have recently completed or have planned investments in India. Select investment projects include acquisitions, capacity expansions, greenfield manufacturing investments, and R&D centers.

Lubrizol and Grasim Industries have entered into a definitive agreement to manufacture and supply CPVC resin in India through increased production capacity in Dahej, Gujarat. The project is set to get completed by 2022. INOX Air Products, a JV between Industrial Oxygen Company and Air Products, announced plans to build eight new greenfield Air Separation Units across India through 2024.

The global trade shifts coupled with fresh policy decisions in India could spell fresh opportunities for Indo-US partnership in the chemical business, say experts.

Aileen Nandi, Minister Counselor for Commercial Affairs, U.S. Embassy & Consulates in India believes that the current bilateral trade between India and the US might sound huge but it is actually the tip of the iceberg given the size of their economies.

“We have identified chemicals as a key area for us. A significant number of patents are attributed to this sector. We have low-cost cover, innovative research, and development, and makes it attractive for Indian companies interested in investing in the US. India on the other hand has a diversified chemical market with close to 80 products. It is very natural that we must collaborate more,” added Nandi.

As per Shawn Whitman, VP – Government & Industry Affairs, FMC Washington DC, India said, “Any new policy must be based on facts and data. Industry must be encouraged to share feedback towards law-making and that will help in the right growth. India is trying to cultivate this environment. From a broader perspective, companies looking at long-term investments will look at bringing cutting-edge technologies, innovative products to the market and that depends on factors such as transparency in decision making, predictability of regulatory and judicial systems to sort out issues, and protecting the businesses.”

Chemical Investments between the US and India have become increasingly bilateral with India increasing FDI in the US, says Mark Lustig, Partner, PwC, US Advisory says who believes the investment from the US to India is largely focused on leveraging the end market access and growth for chemicals (both base and specialty) in the region.

“India is well-positioned with the US in chemicals trade and is projected to further strengthen their position going forward. India is currently the 10th largest chemical trade partner for the US and is estimated to increase to 7th by 2030,” comments Lustig.    

Edward Brzytwa, Director for International Trade, American Chemistry Council said, “Policy conversations are important and one way could be the re-integration of the US-India Trade Forum to have a specific conversation on chemicals. This includes regulations, trade relief on both sides. This will reinvigorate the various aspects of chemical trade including technical barriers. Also, the cooperation between two countries is missing at WTO and that has to change. India must accede to the Chemical Tariff Regularization Forum at WTO for a better outlook.”

Ram Kumar, VP, Chevron (Singapore) said, “The crude oil from the US is light and rich in Naphtha, thus ideal for petrochemical feedstock. Therefore, the share of US companies in crude imports is going to only increase with time. India is importing 80% of its gas and that keeps increasing each year. We want to participate in this market and also in light crude, L&G among other areas.”

Despite many positives, challenges remain in India, especially the land, infrastructure, and regulations, feels B K Sethu, Managing Director – India and General Manager – CE Next Polymers, Celanese said, “India needs continued improvements in the regulatory system, safety environment, and sustainability. While the policies to promote downstream processes and local manufacturing are important, schemes cater to the bottom of the overall value chain. To create the demand at the upstream, we need infrastructure and an ecosystem, where the government has to play a key role.”

Mukesh Aghi, President and Chief Executive Officer, USISPF said, “In chemicals, the business in India currently stands at US $100 billion and is expected to be US $300 billion by 2025. It will require strong investments from the US to India. The US companies can look at opportunities from the downstream perspective and also work in partnership with Indian petrochemical companies to explore a lot of other areas. For this partnership to be successful, we need incentives, encouragement and all stakeholders have to work in tandem. The secure supply chain is vital for this partnership besides the development of new technologies.”

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