Sabaleel Nandy of DCM Shriram Chemicals discusses how geopolitical tensions, tariff disruptions, and volatile supply chains are reshaping the chemical industry. In a chat with Chemical Industry Digest, he highlights the growing importance of energy transition, digital technologies, and innovation while outlining the company’s efforts in cost leadership, sustainability, and expansion into advanced materials. Sabaleel Nandy is the Executive Director and CEO of DCM Shriram Chemicals, one of India’s leading chlor-alkali producers. An IIT Kharagpur and IIM Lucknow alumnus, he previously spent 18 years with the Tata Group and later served as President & COO of Paradeep Phosphates Ltd.
Excerpts from the interview.
Chemical Industry Digest (CID)? How have global geopolitical tensions (e.g., trade restrictions, Russia–Ukraine, Middle East conflicts) impacted global supply chains, feedstock sourcing, and export strategies in 2025? Is the weaponization of trade (tariffs, export controls) by the US and other countries adversely affecting the chemical industry? With volatility in raw material prices and freight costs, how have your cost structures and margins adjusted in 2025?
Sabaleel Nandy (SN). Even as the Russia-Ukraine conflict was still echoing through global trade with aspects such as rerouted shipping and elevated logistics complexity becoming more of a norm, in 2025, “tariffs” have become a central disruptor of global supply chains. A McKinsey survey found that ~82% of global companies reported tariff impacts, affecting supplier/material costs and demand patterns.
- Companies are having to rethink supply chain footprint and supplier geographies. In fact, tariff uncertainty is causing businesses to shift timings (e.g., front-loading shipments before tariff changes), increase inventory buffers, and delay long-term investments while favoring short-term, tactical responses.
- US tariff and trade policy shifts (including duties on metals and punitive measures tied to Russia and until recently Venezuela oil dealings) have raised raw material costs and disrupted chemicals and petrochemical supply chains.
- Businesses are actively diversifying beyond single-region dependencies (e.g., China or Russia), moving toward China+1 or global+1 sourcing models to reduce bottlenecks.
Geopolitical trade weaponization is a material cost and strategic issue for the chemical sector in 2025, especially for export-oriented producers or those reliant on imported feedstocks.
- Direct impact: Tariffs and export controls have raised input costs for chemicals and materials. Even for those products that were initially exempted from tariffs, uncertainty and potential policy escalation created business planning risks and capital allocation hesitation.
- Indirect and Strategic impact: Even where the immediate output product is exempt from tariffs, there have been secondary impacts of subsequent down-the-line products that use these outputs as raw materials getting impacted by tariffs and thereby impacting margins. Plus, higher freight and logistics costs — partly due to geopolitical factors — also burden chemical supply chains as most chemicals are shipped in bulk over sea routes.
- Having said so, however and compared with consumer goods and electronics, basic chemicals have some buffer — they are often more globally fungible — but raw material price increases still squeeze margins and competitiveness.
Commodity business – cost structures and margins in 2025
For us at DCM Shriram Chemicals, as the country’s second largest chlor-alkali player, in a business that’s largely commodity, being affected by global events is natural and expected. However, what we usually do at such times, is to look inwards and focus of enhancing cost competitiveness and operational excellence.
CID? As the new year is dawning, what would you say were two or three of the major trends (such as energy transition, sustainability, Net Zero etc) that have impacted the chemical industry and more particularly, the segments you are in? What are the few important things that have changed in the chemical industry over the years? What do you feel needs to change in the chemical industry?
SN: Here are 3 trends shaping chemical industry in general:
- Energy transition is no longer optional – it’s now structural. The chemical industry sits at the centre of the energy transition because close to ~70% of chemical production cost is energy + feedstock and close to ~25% of global industrial CO2 emissions come from chemicals. In the last few years, with the imposition of carbon pricing, border taxes (CBAM), green procurement rules and investor pressure now directly impact profitability and certain key customers segments such as automotive, electronics, packaging, FMCG demanding
low-carbon materials, the shift from fossil fuels to gas, bio, waste-based and
CO2-derived feedstocks and from massive capital reallocation toward low-carbon capacity is gaining traction. To me, therefore, Sustainability has moved from CSR to license-to-operate.
- Geopolitics has replaced cost as the Number one supply-chain driver: For decades, chemicals optimized for: “Lowest cost feedstock + largest plant + global export”. Now optimization is: “Security of supply + trade access + geopolitical alignment”. To me, this has driven the China+1 sourcing, US–China technology decoupling and regionalization of petrochemical hubs (US, Middle East, India, SE Asia, Europe). In fact, export strategies now depend on tariffs, trade restrictions and sanctions.
- Commoditization + Oversupply à Margin pressure: Most large chemical chains (polyolefins, aromatics, fibers, intermediates) are now structurally oversupplied, increasingly price-driven and volatile due to feedstock and freight. As a consequence, EBITDA margins are lower, cycles are sharper and only cost leaders, integrated players, or specialty niches make consistent money.
What has changed for the chemical industry, say from the 2000s to now are global supply chains being replaced by regionalized trade blocs, cost leadership by cost plus carbon plus compliance, large batch plants by flexible, modular and digitally embedded plants and finally volume growth by value plus sustainable growth.
While this has been the trend, what further needs to change, in order to make the industry more resilient, including the key areas that we, at DCM Shriram Chemicals are focusing on, are: Capital allocation discipline (shift of a mindset from “build if we can” to “build only if its earns cost-of-capital”), more investment in R&D /innovation leading to faster innovation cycles (more new products from existing businesses/more startups in the chemicals space) and finally ensuring that green carbon is priced properly (clean production is rewarded and scope 3 emissions properly traced).
CID? How are AI, machine learning, digital twins, and predictive analytics improving plant performance, quality, and supply chain resilience. How are these deployed in organizations today? With increased digitalization, how are you addressing cybersecurity risks and ensuring the resilience of operational technologies? How are you addressing the dearth of skilled people in these fields?
SN. Predictive maintenance is the area where the impact of machine learning (ML) has been most felt. ML models are able to ingest vibration, temperature, pressure and energy data resulting in failures getting predicted weeks earlier and thereby causing 10-25% reduction in unplanned downtime, 5-10% reduction in maintenance cost and eventually a longer asset life for compressors, pumps, furnaces and reactors.
AI typically sits on top of the existing DCS/APC systems and can handle non-linear behavior better than classical control, resulting in higher throughput for the same energy input and reduced variability causing better yields. On the QC front, AI driven quality prediction can help predict quality in real time (instead of waiting for lab results) thereby resulting in 1-3% yield improvement in continuous operating plants (huge in bulk chemicals).
Cybersecurity and OT resilience are now board-level concerns and the key risks being grappled are around “remote access to plants”, “ransomware and state sponsored attacks”, “IT-OT convergence”, etc. The key mindset shift that one is urging our teams at DCM Shriram Chemicals to adopt is to treat cybersecurity like process-safety and not IT hygiene.
Shortage of skilled people is one of the biggest constraints to scaling digital. We at DCM Shriram Chemicals, believe some common mistakes that people are doing is “hiring only data scientists with no process knowledge” or “expecting operators to ‘just adopt AI’” or have “a big-bang approach towards digital transformations”. Instead, patient and steady investments towards training processes, mechanical and reliability engineers in python, data interpretation and model validation or having hybrid roles (e.g. digital process engineer or SCM data lead) work better. The biggest item is the cultural /mindset shift of moving from experience-only decisions to data-augmented judgements and “trusting models while retaining human over-ride”. We are on it.
CID? What concrete measures have your company taken in 2025 towards decarbonization, circular economy solutions, and green chemistry adoption? Can you share some statistics? To what extent are circular technologies (chemical recycling, waste-to-value processes) integrated into your product lines?
SN. DCM Shriram Chemicals has been steadily working towards progressing the sustainability agenda of the business, across Scope 1, Scope 2 and Scope 3 emissions. Between 2023 and 2025, there has been 14% reduction in Scope 1 & 2 emissions per tonne achieved through increase in renewable energy mix (from 8% to 13%), along with multiple initiatives aimed at efficiency improvements across boiler operations aimed at reducing power and steam consumption. Also, during the same period between 2023 and 2025, there has also been a 19% reduction in Scope 3 emissions. Also, during the same period, water consumption per tonne of finished products has reduced significantly, in spite of capacity augmentation.
CID? The world is in the midst of being impacted by DeepTech. In a knowledge driven area like chemical industry, innovations and R&D are driving huge technological changes, which are crucially important. Has your company increased R&D spending in 2025? If so, in which areas (e.g., sustainable processes, advanced materials, biotech chemicals)? What partnerships with academic institutions, research labs, or start-ups have been most impactful for your innovation pipeline?
SN. DCM Shriram has always been at the forefront of education and research. Our founder Sir Shriram set up the Shriram College of Commerce and the Lady Shriram College of Commerce, both of whom are the nation’s pre-eminent educational institutions today. DCM Shriram Chemicals has its “Innovation Centre” (IC) in Vadodara where a large team of scientists are engaged in solving cutting edge problems in many areas including nano and sustainable /green chemistry. Advanced Materials has been the most recent business entry for DCM Shriram Chemicals through our acquisition of “Hindusthan Specialty Chemicals Ltd” in Aug 2025. In line with business direction, the Innovation Center now has a full-fledged team working on areas of Advanced Material, particularly Formulated resin applications and cutting-edge Value-added products. There are several partnerships that our Innovation Centre has with leading institutions, including one with ICT, Mumbai wherein our scientists work with ICT professors and students in identified areas of joint research.
CID? How do you foresee the future of the chemical industry evolving. What trends will shape the course of the industry in 2026? What are your top strategic priorities for 2026 in terms of growth, innovation, sustainability, and global expansion?
SN. In my view, the chemical industry in general, is moving from “scale and cost” to “sustainability and systems”. For decades, chemical industry was about large plants plus cheap feedstocks. Now it’s about attaining scale while securing low carbon operations plus circularity plus digital intelligence coupled with regional resilience. In my view, 2026 will deepen this shift.
For us at DCM Shriram Chemicals, the top priorities for 2026 will be “Strengthening of cost leadership in caustic while diversifying into Advanced Materials”, “expanding digital and AI deployment across operations and SCM” and “accelerating innovation while reducing carbon intensity”.
