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China plus one :
An opportunity in India
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Figure 1 – Challenges facing Indian agrochemical producers
Diversification away from excessive reliance on China could open up big opportunities for Indian companies and their partners , says Sanjay Gupta of Bharat Rasayan
China is the world ’ s factory and everyone looks there to source raw materials and products . But , as we have all seen , there have been growing issues about supply from China , due to higher labour costs , increasingly stringent environmental compliance costs and other challenges related to the supply chain . Recent , the Boston Consultancy Group carried out a survey among CFOs of companies across the world who use China as a source . It found that 45 % of US CFOs and 25 % of Asian CFOs said that they are already moving or have been in the process of moving some production out of China over the past year . This strategy of diversifying away from dependence on China is known as ‘ China plus one ’. The idea is not to shut off China but to have a stand-by alternative . This applies in the agrochemical sector as much as any . Agrochemical companies have become vulnerably dependent on China and are now looking at alternative source of supply .
The global contract research and manufacturing services ( CRAMS ) business is valued at an estimated $ 200 billion in 2019 , with an Indian contribution of around $ 11.5 billion . Thus , there is a big scope for doing more CRAMS business with Indian companies . Meanwhile , in the custom synthesis and manufacturing business , this trend is also catching up . Many multinational companies are now coming to India to seek these opportunities and are signing longterm sales contracts for the sourcing of AIs and to produce formulations under non-disclosure agreements using the technologies they provide . Indian agrochemical companies are also highly dependent on ( mainly ) Chinese companies for certain raw materials and intermediates . To address this , they are taking steps towards backward integration to reduce this dependency , with the support of the Indian government under its ‘ Make in India ’ programme . Indian companies are now investing big amount in R & D , the generation
of GLP data and registration in major markets , such as the US , Brazil and Japan . As a result , the share of exports in their products is increasing and they are setting up new capacities .
Investments in India
Bharat Rasayan itself is the fourth largest producer of technical grade pesticides and their intermediates in India . It has sales of over $ 294 million / year , of which over $ 85 million are exported to more than 65 countries . It has more than 210 international registrations The company has tied up with a major multinational to produce AIs and formulations under technology transfer . We are also supplying key intermediates and doing contract manufacturing of AIs for multinationals . Bharat Rasayan has three manufacturing plants , one of which is a joint venture with the Japanese firm Nissan Chemical Industries to produce patented products for both the Indian market and for export from a site in Gujarat under the name Nissan Bharat
26 SPECIALITY CHEMICALS MAGAZINE ESTABLISHED 1981