Rupee slide forces Gujarat chemical units to cut production

Gujarat has an almost 55-60% share in total production of chemical and dyestuff in the country, said Vasa, adding that due to the lower demands and increased input cost, most of the chemical units are operating at just 25-30% of their capacity.

Rupee slide forces Gujarat chemical units to cut production
Not only imported raw materials, even prices of domestically-produced inputs including caustic soda and soda ash have also escalated, said Manish Kiri, managing director of Ahmedabad-based Kiri Industries.

By Nayan Dave

Chemical and dyestuff manufacturers in Gujarat have been forced to cut back production up to 70 to 75% on account of continuous depreciation of rupee, lower international and domestic demands, and disturbed geopolitical situation globally, said Yogesh Parikh, an industry expert in chemical and dyestuff manufacturing and a former president of Gujarat Dyestuff Manufacturers Association.

According to industry players, prices of key raw materials have risen up to 200% in a span of 6-8 months due to multiple reasons. Basic inputs including H-acid, gamma acid, vinyl sulfone, naphthalene, benzene, aniline, cyanuric chloride, etc., have escalated beyond the affordability of MSME chemical and dyestuff makers across the country, especially in the past three months.

“With the increasing import cost of raw materials, the domestic chemical industry is losing its competitiveness in the export market. It is difficult to compete against Chinese players, who are dumping their products not only in international markets but also in Indian markets at lower prices,” said Jaimin Vasa, president, Gujarat Chemical Association.

Gujarat has an almost 55-60% share in total production of chemical and dyestuff in the country, said Vasa, adding that due to the lower demands and increased input cost, most of the chemical units are operating at just 25-30% of their capacity.

Not only imported raw materials, even prices of domestically-produced inputs including caustic soda and soda ash have also escalated, said Manish Kiri, managing director of Ahmedabad-based Kiri Industries.

Yogesh Parikh, former president of Gujarat Dyestuff Manufacturers Association (GDMA), said the market situation for the dyestuff and chemical industry has become volatile, following Russian invasion on Ukraine.

The industry is also suffering because of the unprecedented depreciation in rupee and from the stiff Chinese competition. There are more than 20,000 chemical and dyestuff units across Gujarat having a cumulative monthly turnover of almost Rs 60,000 crore.

These units are spread across Ahmedabad, Vadodara, Ankleshwar and Vapi. Annual exports of chemical and dyestuff from Gujarat exceeds Rs 20,000 crore. More than 90 % of these units fall under the MSME category. These units are providing direct employment to more than 300,000 people.

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