“India has all that it takes to emerge as a Manufacturing Country

Dr Raman Ramachandran
Head – South Asia and Chairman, BASF India
“For us, sustainability does not end with just our goals, products or solutions. It is about partnering with our customers, distributors, suppliers and the society, to make sure that their sustainability goals are met as well as the prescribed regulatory standards is adhered to. It is also about elevating the benchmarks for sustainability practices in the country. The true effect of sustainability will be seen only if the entire value chain adopts it” says Dr Raman Ramachandran, Head South Asia & CMD, BASF India Pvt Ltd in an exclusive interview with Mittravinda Ranjan

The Indian chemical sector is estimated to grow at 10 per cent in the coming decade, what will be the key growth drivers for the specialty chemicals industry?
The growth of the Indian chemicalindustry is directly linked to the overall GDP of 7-9 per cent. Per capita GDP increase will result in upsurge in demand of products like food, white goods, automobiles and other consumer goods. Specialty chemicals are enablers for all these industries. Therefore, the growth potential for the Indian speciality chemicals segment is very high.
How will sustainability complement the growth of this industry?
By 2050, the world will have a population of 9 billion people. And, as per a 2015 UN report, a majority will live in Asia; with India being the most populous. India’s middle-class population is expected to grow to 475 million by 2030, forming around 70 percent of the country’s total population, as per a report by global workplace solutions provider, Steelcase.
This increase in population and in the middle class means growing purchasing power, which translates into consumers’ demand for higher quality of living. People will need better access to affordable energy, housing, transportation, healthcare, quality food and air. While this offers growth opportunities to many sectors, it also poses a challenge for the industry as well as the government, to ensure products, processes and polices that promote cleaner technologies and manufacturing practices; thereby reducing pressure on resources.
It is essential that industries selfregulate in order to stay competitive. Especially since sustainability initiatives are increasingly being driven by end consumers. The textile industry is a classic example, where global brands are demanding sustainable production practices, because of the value it adds to the brand on one hand and the NGO campaigns on the other hand.
The automobile industry is another example, which is now taking steps to reduce emission of carbon monoxide, nitrous oxide and particulate material in the environment since the Indian Government has mandated implementation of BS IV norms for heavy vehicles by 2017; and compliance with BS VI norms for automobile industry by 2020.
As India becomes party to various global environmental treaties, there will be obligations that will be placed on us. Today, being environmentally and socially responsible goes hand in hand with running a profitable business. As an industry, we must further strengthen our focus on sustainability and also lead the way in bringing in technology and innovation which will help address many of the challenges of the world. Initiatives like Responsible Care, Together for Sustainability (Tfs) and Nicer Globe will play a major role here. The goal should be to make the entire value chain sustainable (SMEs, distributors and customers).
BASF is a leading member of all these industry initiatives and additionally we are also an active member of Indian Chemical Council, mentoring many companies to help achieve standards like Responsible Care Certification.
What steps has BASF taken in this direction?
Responsible chemical companies such as BASF are not only managing our own operations sustainably, but also focusing on the sustainability performance of our solutions. And as an industry leader, we see ourselves playing a major role in steering the industry in this direction.
We define sustainability as balancing economic, environmental and social needs. Sustainability is at the core of BASF’s existence and helps us achieve our company purpose “We create chemistry for a sustainably future”. Each of our solution is assigned to one of four categories (Accelerator, Performer, Transitioner, and Challenged) according to its contribution to sustainability. Although different industries vary in their specific needs, we are able to cluster our Accelerator solutions into predefined universal sustainability benefits (e.g. resource efficiency). Globally, we invest over 60% our R&D budget on “accelerator” products. Our strategy is designed to get an ever-increasing percentage of our sales from products which have high sustainability impact.
For us, sustainability does not end with just our goals, products or solutions. It is about partnering with our customers, distributors, suppliers and the society, to make sure that their sustainability goals are met as well as the prescribed regulatory standards is adhered to. It is also about elevating the benchmarks for sustainability practices in the country. The true effect of sustainability will be seen only if the entire value chain adopts it.
We see this as an opportunity for ourselves and our partners to make a difference in India where our products can help to save energy and reduce emissions for the development of sectors of automotive, construction, and water treatment.
• More efficient, environmentallyfriendly cars: BASF materials such as engineering polymers and polyurethanes are used throughout cars to make them lighter and thus save fuel. Our products also reduce the energy and emissions in the production process – like paint and coatings systems that reduce energy and heat as well as volatile organic compounds (VOCs).
• Better management of food waste with biodegradable plastics: We are working with the government to address the challenge of waste management and composting. While compostable bags can be one major solution to plastic pollution, what is most important is the end of the life cycle -- composting of this waste. Though there is still a long journey ahead, we are hopeful that we will jointly (with the government) be able to bring in the much needed solution to this challenge.
• Improving water management with “India Water Tool”: This online tool helps the development of a comprehensive corporate water management strategy and holistic stewardship approaches. It has been developed by a Working Group of 13 partners including ten companies and three knowledge partners, coordinated by the WBCSD. This tool is a great example of collaboration between key players to create a sustainable future for business, society and the environment through responsible water management. There is an increasing understanding among leading companies that water is a shared resource with finite volumes resulting in collective risk.
During FY 2016-17, BASF posted results that were lower than expected as a result of sub optimal monsoons and fall in crude oil prices. What measures is BASF taking to address the challenges to improve the performance during the current financial year.
Yes, the results were lower than expected due to two years of drought that had a major impact on our agro business, one of the largest and profitable businesses and sharp decline in oil prices. Both these factors are very crucial but are beyond our realm of control. As an organisation we have taken this time to introspect and restructure some of our strategies and processes, with the aim to improve our efficiencies at all levels.
Please talk about the plans of BASF for the Indian market.
BASF has always been committed to the Indian market and believed in its growth potential. Over the last 3-4 years, we have invested around Rs. 2000 crore in assets in order to prepare ourselves to reap the rewards from this growth potential.
Our Dahej site, two construction chemical plants in Nellore and Kharagpur and Agricultural Research Station on the outskirts of Pune are testimony to this.
Additionally, we are also investing in expanding our manufacturing unit in Chennai, to supply emission catalysts to the automobile industry and are close to commissioning our Innovation Campus in Mumbai, which will be an integral part of BASF’s global innovation network We believe that innovation and sustainability are going to be the drivers of the market. BASF has clearly defined its purpose of creating chemistry for customers and in partnering with them to innovate products, which can differentiate them in the market.
What are your thoughts on the Make in India initiative?
India has all that it takes to emerge as a manufacturing country. According to labour ministry data, around 1 million people enter the workforce in India every month. The manufacturing sector can absorb a good proportion of these people. India has seen substantial investments in manufacturing activities and the Make in India initiative will further boost growth of the manufacturing sector. The government is trying to create a favourable business environment for businesses and industries and this is one area which we also look forward to benefit from.
In your opinion, which are the other areas that need strong collaboration between the industry and government to support the growth of Indian chemical industry?
There is a need for continuous dialogue between the government and the industry because there is a need to recognise that while there is a sincere intent at the top, the last mile delivery often gets affected. As an industry, we need to take advantage of the good intent of the government and use specific examples to provide feedback for continuous dialogue, to improve ease of doing business.
The passing of GST bill is once such landmark tax reform, which came out of government-industry dialogues.
To increase the investment and growth of the chemical industry in India, we need to benchmark ourselves with regard to energy cost, to be able to provide materials and products at globally competitive prices. Since India is highly dependent on energy imports, the Indian Government needs to device solutions to provide energy to industry at a cost that is competitive with other countries globally. Setting up reverse SEZs in Bangladesh and Iran is a positive step in this direction, to secure long term feedstock availability.
Efficiencies and improvements in logistics and infrastructure will also be welcomed by the industry. The government is planning to develop inland waterways which will offer more economical and efficient mode of transportation to the industry. This will definitely go a long way to support the industry.
The last area where we require active collaboration with the government is regulation. Here, the industry needs to work with the government to bring in alternate technologies with lesser environmental impact and regulations needs to be shaped in such a way that they don’t come in suddenly and are phased over a period of time, giving the industry time to adopt.
What are the future plans of BASF in India and other countries in South Asia?
Our future plan is to grow profitably and ramp up utilization of assets that we have created on-ground. Being a part of the global R&D network, we are focused on leveraging the talent available in the country and aim to position ourselves as a company which is able to provide real innovative solutions for our customers in India.