Coronavirus impact: Gujarat dye intermediate industry feels raw material shortage

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Published: February 26, 2020 7:50:23 AM

With almost Rs 60,000 crore monthly turnover, Gujarat is having lion’s share of over 75% in India’s chemical and dyestuff industry.

Coronavirus, coronavirus impact in india, coronavirus economy impact, coronavirus impact on industry, Gujarat’s chemical and dyestuff intermediate industryIn the absence of cheaper Chinese competition, the local manufacturers have increased the prices by two to three folds, which is unaffordable.

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.

“If this embargo would remain for longer period, gradually most of the units would close down in Gujarat. Although our Chinese suppliers have assured to restore supply of raw materials as early as possible, we are currently in complete state of uncertainty. The situation may lead to job cuts in the segment in coming days,” says Parikh.

Prices of vinyl sulphone has shot up from Rs 170 per kg to as high as Rs 470. In the case of h-acid prices have gone up from Rs 360 to almost Rs 480 per kg. Shailesh Patwari, former president of Gujarat Chamber of Commerce and Industry (GCCI) and chairman of Naroda Envrio Projects, said that there is no availability of cyanuric chloride, a basic dye-intermediates, as Indian industry is solely dependent on Chinese import.

According to Patwari, in order to prevent such critical situation in future, the government of India and domestic chemical and dyestuff industries should try to manufacture basic raw material in the country itself.

“This is the right time to convert adversity into opportunity. Nearly a year ago, Chinese suppliers had increased the prices of raw material. Despite the fact, Indian units continued buying raw material as there was no alternate. Again similar situation arise in form of natural calamity,” he opined.

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