Abstract

It is important to reduce the use of petroleum products for vehicular transportation to reduce forex outgo as well as reduce carbon emissions. The government encouraging ethanol blending is welcome. However, ethanol only from sugarcane is not enough. Sugar beet is a feasible option to produce ethanol. This article highlights the importance of sugar beet for ethanol production which can be blended with fossil fuels. Importance, advantages and mechanics of ethanol generation from sugar beets are presented.

Importance of ethanol

India presently imports more than 220 million tonnes of crude oil and more than 32 billion cubic meter of natural gas per annum. The demand for crude oil and natural gas in India is increasing at 6 to 7% per annum, where as production is virtually stagnant. The outflow of foreign exchange due to import of crude oil is presently more than 27% of India’s foreign exchange earnings.

Under the circumstances, there is an urgent need to reduce the consumption of crude oil and natural gas in the country, to ensure energy security. While Govt. of India has taken a few initiatives to meet the impending energy crisis, one of the most important strategies of the government is to blend ethanol with petrol, that would reduce the consumption of petrol and consequently reduce the crude oil requirement.

Therefore, it is vital that the production of ethanol in India should be substantially increased for its use as fuel. Further, ethanol is also a strong building block for the production of a number value added derivative products. Therefore, boosting ethanol production as much as possible is the priority of need of the country.

Ethanol blending – Achievement & Target

In the current ethanol supply year (December-November), about 186 crore litres of ethanol have been blended with petrol until May 8, achieving around 10 per cent blending. Prime Minister has applauded the achievement of the target of 10% ethanol blending five months ahead of schedule. He further pointed out that in 2014, ethanol blending was only at 1.5%. Prime Minister said that 10% ethanol blending has led to the reduction of 27 lakh tonnes of carbon emission and has saved foreign exchange of Rs. 47,000 crore. Government of India has now set a target of 20% ethanol blending with petrol by the year 2025-26.

Requirement and availability of ethanol

NITI Aayog estimates the current annual ethanol production capacity at about 426-crore litre from molasses-based distilleries and 258-crore litre from grain-based ones. The production has to be increased to 760-crore litre and 740-crore litre respectively by 2025 to achieve 20% fuel blending – with 484-crore litres to spare to meet other needs. Considering the present status of new ethanol projects, the total capacity of ethanol is likely to increase to about 950 crore litres by December 2022 and 1,200 crore litres by December 2023.

Choice of feedstock

To boost the production of ethanol, Government of India has permitted ethanol production from different feedstocks such as C heavy molasses, B heavy molasses, sugarcane juice, sugar, sugar syrup, maize, damaged rice etc. India’s sugarcane acreage at present is around 46.67 lakh hectare. This results in sugarcane production of 430.5 million tonnes and sugar output of 35.5 million tonne. Even after the diversion of 3.5 million tonnes of sugar for ethanol production, there is a surplus of 8 million tonnes of sugar.

Sugarcane – Water intensive crop

Sugarcane is a water intensive crop. Water availability in India including surface water (river etc) and ground water is assessed to be around 1123 billion cubic meters. Central water commission has projected that India’s water need will increase from 634 billion cubic meters in year 2000 to 1093 billion cubic meters in the year 2025 and further to 1447 billion cubic meters in 2050. By then, Indian water requirement will exceed its resources. Out of the present water requirement in India, 85% of water is used for agriculture. Of this, sugarcane crop uses major share of water.

One tonne of sugar cane needs 60 to 70 tonne of water for cultivation. In Maharashtra alone, which is the major sugarcane producing state in the country, 71% of irrigation water is assessed to be used by sugarcane crop.

Therefore, it is clear that the consumption of water for sugarcane farming has to be reduced significantly. This, obviously, means that sugarcane farm area should not be increased and should preferably be decreased to a considerable extent. Under the circumstances, depending upon the sugar sector to boost the ethanol production in India in future to the level of future requirement of ethanol would amount to planning in vacuum.

Is it appropriate to use grains for ethanol production ?

To increase the production of ethanol, Govt. of India has permitted that grains such as maize, rice, etc can be used as feedstock for the production of ethanol. There is considerable criticism about this strategy of using grain as feedstock for ethanol production. Such criticism appears to be justified, since grains are food material. Further, grains are the starting material for the production of starch, which is the strong building block for the production of various value added products such as citric acid, L-Lysine and others. Number of such derivative products are presently not produced in India.

Therefore, a strong case exists to use such grains for the production of starch, which will lead to the production of several important derivative products. The criticism about the use of grains for the production of ethanol as a counter productive and short sighted approach appears to be appropriate.

Ethanol from Sugar Beet – Need of the day

Sugar beet is not only a source of sugar, but it also provides several by-products such as ethanol, pulp and leaves for cattle feed. Sugar beet contains 15 to 17% sucrose and in the process of sugar extraction, 12 to 14% of recovery is obtained. Sugar beet is cultivated in 41 countries in the world including Russia, Ukraine, France, Germany, USA, Egypt and others for the production of sugar and other derivative products. In view of the several compelling conditions in India, it is appropriate that sugar beet should be used as feedstock for the production of ethanol. Unfortunately, sugar beet is not presently produced in India on a commercial scale.

Sugar beet can be grown in black cotton soil. Since it is a salt tolerant crop, it can be grown in salty soil, where several other crops can not be grown. Sugar beet can also be grown in clay loam soil. Several regions in India are found to be suitable for sugar beet cultivation. The requirement of water for sugar beet cultivation is much lower than that of sugar cane cultivation and harvest time is much lower than sugarcane, as indicated by the following details.

Process for ethanol from Sugar beet

Sugar beet has dry matter and high sugar content and therefore, quicker fermentation is possible. The initial operations for ethanol processing are washing of sugar beet roots, so that all the dust and mud particles are removed. The beet roots are thinly sliced into round pieces, which are known as cossettes. This process helps in extracting out the sugar content from the roots. The cossettes are dipped in hot water for juice extraction, after which the juice is fortified with nutrients. The adjustment of pH to 4.5 is required for lesser microbial. Sterilization of juice is the next step after pH adjustment, which requires a pressure of 15 psi for specific time. On cooling of the juice, the fermentation process is initiated by addition of yeast for the production of ethanol. Commercially available yeasts help in the conversion of glucose (produced after enzymatic hydrolysis through invertase enzyme) to ethanol, under an environment where oxygen is deficit. Anaerobic fermentation is responsible for the production of ethanol from sugar beet roots.

Half hearted measures

In India, trials on sugar beet cultivation have been carried out in different geographical locations including Karnataka, Maharashtra, Tamil Nadu, Gujarat, Uttar Pradesh, Rajasthan, Haryana, Andhra Pradesh and Telangana. Growing of sugar beet was tried at Indian Institute of Sugarcane Research (IISR), Lucknow and at Padegaon (M.S.) in 1960’s.
In 1970, the work was initiated under All India Co-ordinated Research Project (AICRP) on sugar beet. On the basis of agronomic trials conducted at various locations in India, sugar beet cultivation was taken up in Sriganganagar of Rajasthan for sugar production and in Sundarbans of West Bengal for alcohol production. A few other organizations such as Rana Sugars Ltd., Shree Renuka Sugar, Samarth SSK Ltd., Vasantdada Sugar Institute have also carried out several trials.

Although there are many advantages in favour of the sugar beet crop over sugar cane viz. short duration, less water requirement and potential for intercropping, yet issues regarding availability of seed of indigenous varieties, harvesting techniques, post harvest management have to be optimised. Though, development efforts with regard to sugar beet cultivation have been taken up several years back, the progress has been disappointing, possibly due to half hearted measures of sugar units and research bodies.

Need for policy initiative

Government of India’s policy with regard to boosting ethanol production has been dynamic and proactive. However, it is surprising that the feasibility of producing ethanol from sugar beet has not been given importance and such projects have not been implemented so far on a commercial scale.

Obviously, the government’s focus on ethanol production from sugar beet has been inadequate, in spite of its national importance. Considering the urgent need to increase the production of ethanol and limited alternative options available for boosting ethanol production, need for the ethanol from sugar beet must be recognised by the policy planners and stakeholders.

This is the subject where maximum focus has to be there by the government of India, just as in the case of renewable energy projects, electric vehicles and hydrogen economy. Need for ethanol production from sugar beet is no less significant.

Abstract

Sustainable development has become crucially important globally for the sake of quality life for current and future generations while addressing the crises of climate change, pollution, loss of flora and fauna, etc. This article briefly discusses the importance of sustainability along with its evolution and global declarations made to address the same. The article briefly outlines some of the major areas of concern and the problems and solutions that advances in chemical processing can offer.

Introduction

The present times are marked by shifting global priorities at a pace not as evident as ever before. The rising energy costs and widespread discussions on environmental sustainability prevailed in 2019 which shifted after the outbreak of COVID-19 in 2020. As the pandemic eased after two years, the eruption of the Russia-Ukraine war in 2022 led to the prospects of the shortage of fertilizers and raised apprehensions about an upcoming food shortage. It also reinforced the necessity of attaining national self-reliance in the matter of critical inputs and products for energy and economic security. Now discussions have once again brought back climate change to centre stageandthe need to advance the earlier stipulated timeline for achieving carbon neutrality through an accelerated intervention in planning, innovation and cooperation. Amidst the ongoing war, heightened global inflation anddisruption of logistics, nations and businesses have prioritised their focus on renewable power, energy transition, decarbonization, digitization andgreen hydrogen in order to reduce the carbon intensity of existing operations and also sustain the business. India, with its contemporary socio-economic realities, can’t choose the path of the decarbonization agenda pursued by the developed West. Therefore, as the Prime Minister proclaimed at COP21, our efforts to become carbon neutral will be achieved through a systematic intervention covering all sectors of the economy for which it may need time span till 2070. The country’s manufacturing sector- of which chemical processing industries have a major share- has to substantially contribute and lead the targeted efforts towards achieving theabove environmental sustainability agenda and its action plan.

Sustainability Movement- a Brief History

The global sustainability movement, which is two decades old and which has gained currency with the World Summit on Sustainable Development (WSSD), Johannesburg in 2002 has impacted on almost all walks of life and transcended from its early focus on the reduction of environmental burden, achieving resource optimization, energy efficiency and waste elimination to a carbon-free development paradigm targeted to achieve the COP21 protocols by 2050 through a well defined progressive transition. On the industrial front, it started with the betterment of processes through innovation, development of new generation materials, catalysts and full-scale conversion, recycling and reutilisation of effluents, emissions and solid wastes. Hitherto developments have little impacted the basic tenets of agriculture, manufacturing and servicing which almost remained intact.
The new understanding is highly disruptive. With the set of programs at hand and scale of progress achieved so far, we may not meet the desired goals and extend the sustainable life of the planet earth. The new understanding is that a complete transformation is needed in several sectors of human activities especially in the industrial sector both in its manufacturing and end uses. This evolutionary understanding with regard to industry and business is well articulated in the following UN declarations.

Agenda 21 and the Rio Declaration on Environment and Development, 1992 provide the fundamental framework for policy discussion and action on matters related to industry and sustainable development. Although the role of business and industry, as a major group, has specifically addressed issues related to industry and economic development, consumption and production patterns, social development and environmental protection cut across the entirety of Agenda 21.

The UNDP Millennium Ecosystem Assessment (MEA), 2000, an international scientific assessment of the consequences of ecosystem changes for human well-being observed that “Significant reductions in net greenhouse gas emissions will require technological solutions that could include a mix of fuel switching (coal/oil to gas), increased power plant efficiency, renewables (biomass, solar, wind, run-of-the-river, and large hydropower, geothermal, and so on), and nuclear power. This portfolio would be complemented by more efficient use of energy in transportation, buildings, and industry sectors. In addition, technologies for carbon dioxide capture and sequestration pre-and post-combustion can add to the toolkit needed to address the substantial challenge of stabilizing greenhouse gas concentrations in the atmosphere. While these technologies exist, they need to be improved to make them economical and environmentally friendly”

The UNIDO Lima Declaration, ‘Towards inclusive and sustainable Industrial Development’, 2013 proposed that “industrialization is a driver of development. Industry increases productivity, and job creation and generates income, thereby contributing to poverty eradication and addressing other development goals, as well as providing opportunities for social inclusion, including gender equality, empowering women and girls and creating decent employment for the youth. As the industry develops, it drives an increase of value addition and enhances the application of science, technology and innovation, therefore encouraging greater investment in skills and education, and thus providing the resources to meet broader, inclusive and sustainable development objectives.” Inclusive and sustainable industrial development has been incorporated, together with resilient infrastructure and innovation, as Sustainable Development Goal 9 in the 2030 Agenda for Sustainable Development.

The Addis Ababa Action Agenda ‘International Conference on Financing Development’, 2015 which provides a new global framework for financing sustainable development by aligning all financial flows and policies with economic, social and environmental prioritiesfocus on “promoting inclusive and sustainable industrialization” and on “generating full and productive employment and decent work for all and promoting micro, small andmedium-sized enterprises.

The Global Environmental Outlook -6th edition, commissioned by UNDP in 2019, is a serious study across continents to arrive at a roadmap for achieving the United Nations Agenda 2030, in which hunger and poverty are consigned to history, and where biodiversity, oceans, land and freshwater are protected and restored to health. It’s clear that achieving this requires a transformation in human lifestyles and productive activities: our industry, agriculture, buildings, transport and the energy system which powers them.
The above conventions, studies and protocols have impacted the development of modern industries such that in every step they are encouraged to pursue greener pathways in their development processes. They also support the fight against climate change through applications such as renewable energy sources, zero-carbon processing technologies, electric and high-efficiency vehicles and building materials that reduce energy consumption.

Focus on Chemical Processing

This is very much evident in the case of chemical processing industries. Modern living is impossible without the services rendered by numerous chemical products and ingredients. As chemistry provides the building blocks for nearly 96 percent of all manufactured goods, it plays an integral role in reimagining the products, technologies, resources and systems that are capable of powering a circular, sustainable economy. The fundamentals of chemical processing are built around thermodynamics and chemical kinetics as cornerstones. Even with the advanced process technologies and latest version of equipment in each of the segments of chemical processing, we are not able to achieve a full-scale conversion of raw material into desired products leaving nothing. This inefficiency of engineering systems often reflects as waste and cause burden to the physical environment. In every step of its advancement, chemical engineers are reminded of these inherent inefficiencies and research and innovation arefocussed to minimize and eliminate the same. Modern designs of plant and equipment with increased reliability, new generation catalysts with better conversion efficiencies, advanced material of construction to withstand the harshness of the operating environment, a high order of resource optimization, predictive maintenance techniques, energy efficiency, automatic rigorous plant monitoring capabilities, safety and abnormal situation management, environment monitoring and emergency planning are all outputs of the above thought and action.

Rapid industrialization and urbanization are key drivers of environmental change affecting air, water, land and biota to varying degrees. Environmental issues related to industrialization have widespread linkages, it encompasses not only the manufacturing and energy sectors but also those that arise out of application of industrial products, be it in intensive agriculture, healthcare, education or entertainment, etc. Life Cycle Analysis is a useful tool to assess the potential social, economic and environmental consequences following a cradle to grave approach in using different industrial products and materials.
The primary energy sector which currently is undergoing a cosmic transformation from petroleum and other fossil resources to renewables and hydrogen is considered as a major advancement towards sustainability in the manufacturing sector which is already in the forefront of achieving a higher order of energy efficiency in its current operations.

Air quality

Damage to air quality around industrial installations is a major problem. Despite having several legislation and protocols and its stringent administration of several industrial locations around the world, the air is polluted. Policymakers will need to target multiple pollutants and sources to address these concerns, including new and emerging sources. Source reduction, elimination of emissions and complete absorption are the available solutions which could be diligently selected and applied.

Water use and pollution

Industrial water use leads to twin problems- water scarcity and pollution from effluents. These twin issues have a direct bearing on groundwater depletion, contamination of surface water and groundwater, nutrient pollution from intensive agriculture and aquaculture, and low concentration contaminants that often escape wastewater treatment and ambient monitoring programs. Here, policy options are needed at the national level to reduce the water intensity of manufacturing and for effecting complete recycling of effluents.

Biodiversity loss

Loss of biodiversity is another fall out of industrialization arising out of demand for resources from biodiverse regions, be it mining or mineral exploration through fracking etc. Much needs to be understood with regard to the impact on neighbouring biodiversity with the large-scale use of GM crops for better productivity and profits. The social and environmental impacts of these “enhanced” species and the need for new policy responses are to be examined in detail in advancing sustainability.

Electronic waste

Mountains of electronic waste accumulated particularly around urban locations has emerged as a major environmental issue needing attention at the global level. Apart from household sources, the industry is the major sources of these types of waste. Several countries have already banned the import of E-waste. Consumer trends that demand the latest electronic products, well before the usability of older products expire, pose a serious challenge here. Though the application of the 3Rs (reduce, reuse, recycle) may offer temporary relief, the need for technological solutions which include the recovery of precious material, metal and plastics have to turn out to become handy for future years. Moreover, the disposal of solar panels and batteries that have outlived their useful life, in abundant volumes, is becominganother major issue, for which even today we do not have benign solutions. International co-operation is needed to develop state-of-the-art treatment and disposal technologies, best management practices through research and innovation and formulate effective policies for containment of E-waste materials.

Plastics pollution

Plastics is a versatile industrial product having varied applications. A major concern is regarding pollution arising out of the production and use of plastic materials and the pervasive release of microplastics into marine and freshwater environments, inflicting toxicity to fish and other aquatic organisms and ultimatelyreaching to humans.There is widespread recognition that urgent action is required to reduce the leakage of plastics into the ocean, but there is no simple solution for the same. As an interim step we may have to explore the potential of replacing conventional plastics with alternative materials in certain applications, as part of a wider strategy of reducing marine plastic litter and microplastics. There is a clear need for environmental economists to work with agronomists, material scientists, environmental scientists and others to devise more realistic and reliable techniques for whole life cycle analysis assessment.

Bioremediation

Fertilizer and pesticide residues, discarded pharmaceuticals, antibiotics and personal care products that are being detected in the aquatic environments and drinking water, can have adverse impacts on biota and potentially on human health. The source of entry is from the manufacturing site as well as the user’s end. The excessive use of antibiotics in livestock animals and the potential transfer of antibiotic-resistant bacteria to humans is also coming up as a not-so-easy unsurmountable hurdle. Some of these pollutants bioaccumulate in the environment and ultimately reach man through various means. They are hazardous because of potential toxicity, mutagenicity, carcinogenicity, and genotoxicity. To rejuvenate nature, chemical remediation methods are currently available but there are usually expensive and might convert one toxic pollutant to another. Decontamination of soil and water from the presence of these materials through bioremediation methods using naturally occurring microorganisms to detoxify these pollutants to harmless products is the right approach in this regard. It requires a lot of R&D efforts to stabilize the process of remediation and achieve the desired decontamination.

Conclusion

Industrialisation has impacted the development of human civilization at least for the last four centuries. It has been instrumental in lifting millions of people out of poverty across the globe. But it has also damaged the ecosystems – air, water and land, natural resources and contributed to climate change. The wheel of development never stops. From the days of the primitive steam engines and spinning wheel, the transition to advanced manufacturing systems, technologies, materials and now-a-days to capabilities such as data analytics, digitization, to robots, artificial intelligence and blockchain technologies have not only revolutionized the production process but also brought forth multiple opportunities to minimize its environmental burden.

Today, the benefits of the modernization of industry are not readily available to all countries and citizens. The rich enterprises, with their investment potential, draw the advantages of mature technologies at the first instant. The vast inequality prevailing among the developing countries creates barriers to accessing the potential benefits of modernization, especially for the small- and medium-sized enterprises. In this respect international policy formulations with regard to freely sharing environment bettering technologies to developing and underdeveloped countries become relevant to the targeted achievement of the global agenda. In fact, such an inclusive effort needs equitable collaboration and support of all stakeholders – national governments, industry and business, research and innovation, technology developers and providers, and global institutions and frameworks for guidance and performance monitoring.

Abstract

Copper is important to the economy of the country. Despite the need and demand for copper in the country and that the central government itself wants to promote the manufacture of copper in the country, Sterlite Copper in Tamil Nadu, which used to produce one-third of country’s copper requirements, has been forced to shut down due to various protests and pressures. Now Vedanta has put the Sterlite plant on sale. This is a pity. The author briefly describes the issues that led to the plant’s closure and what’s the future for Sterlite Copper.

It is reported in the media that NITI Aayog member V.K. Saraswat has pitched for providing a production linked incentive ( PLI) scheme to the copper sector,  stating that primary copper production is critical for India to be an export hub.

The above statement is surprising, since Sterlite Copper, a large copper unit has been forced to remain closed for over four years now in Tuticorin, Tamil Nadu and the subject is before the Supreme Court for decision regarding reopening the unit.

Indian Copper scenario :

There are three copper smelter units set up in India namely Hindalco at Dahej, Gujarat with installed capacity of 5 lakh tonne per annum, Sterlite Copper at Tuticorin, Tamil Nadu with installed capacity of 4 lakh tonne per annum and Hindustan Copper Ltd. with much smaller capacity.

Hindustan Copper Ltd produces copper metal from the ore produced at their captive mines. Sterlite Copper and Hindalco Industries Ltd have been producing copper metal from imported copper concentrates.

Sterlite Copper Unit:

Sterlite Copper unit which was set up over a decade back in Tamil Nadu was closed and re opened more than once due to environmental issues raised by some activists.

Sterlite Copper has consistently said that it has not violated any environmental norms. National Green Tribunal confirmed that if there was any environmental issue in Tuticorin region, it has not been due to Sterlite Copper, but for some other reasons. National Green Tribunal permitted the operation of Sterlite Copper.  However, due to violent agitation by the activists, the Sterlite Copper unit was ordered to be closed by Tamil Nadu Government  in May,2018.

While the unit has not been in operation for over four years now, a few investigation team including from Anna University have confirmed after detailed study that there have been no change in the environmental condition in Tuticorin region after the closure of Sterlite Copper unit. Obviously, this means that Sterlite Copper Unit has not been responsible for causing any environmental issue in the region.

When Serlite Copper was operating, it was meeting around 33% of India’s requirement of copper,  with annual copper demand of around 6,30 000 tonne per annum in India.

When Sterlite Copper was operating, India was exporting copper.  After the shutdown of production at Sterlite Copper, India is now importing copper and is now net importer of copper with huge outflow of foreign exchange.  In the global market, Chinese copper units gained considerably due to the stoppage of copper export from India.

What’s in future for Sterlite Copper?

It is now not clear as to what would be the future of Sterlite Copper plant in Tuticorin, since the matter is before the Supreme Court.

However, it appears that the motivated activists protesting against Sterlite Copper operation and the politicians belonging to the ruling party and their allies in Tamil Nadu appear to be determined not to permit the resumption of operation of Sterlite Copper.

Due to the closure of Sterlite Copper unit , around 2000 direct employees and around 7000 indirect employees such as workers employed by the contractors have lost their job. They have repeatedly appealed to the Government of Tamil Nadu to reopen Sterlite Copper unit.

A number of residents living in Tuticorin and surrounding areas have also appealed to Tamil Nadu government to reopen Sterlite Copper, as the continued closure is adversely impacting the economy in the region. Number of them confirmed that they have not been affected due to operation of Sterlite Copper.

Shift the Sterlite Copper  unit  out of Tamil Nadu

While the concern of the NITI  Aayog member about inadequate production of copper in the country is appropriate, what is the point in launching the PLI scheme for copper production when a large capacity copper unit has been forced to remain closed in Tamil Nadu?

Considering the fact that Sterlite Copper was operating well and was also exporting copper successfully around the world, it is necessary that this valuable project should not be allowed to go waste.

Under the circumstances, considering the ground reality that there is a motivated hate campaign against Sterlite Copper unit by some activists and the state government is not in favour of the project for whatever reasons, the Government of India should encourage the Vedanta Group to shift the Sterlite Copper unit out of Tamil Nadu.

While shifting this large copper plant from Tuticorin to another location would be an expensive affair, it would certainly be much less expensive and much less time-consuming than setting up a new copper smelter project elsewhere.

Tamil Nadu’s loss will be a gain for some other state and certainly it would be a gain for the country as a whole.

Abstract

As everyone knows chemical industry is one of the most complex industries. It handles thousands of diverse materials from benign to the most hazardous. The industry also needs apart from raw materials various kinds of equipment and accessories made of different materials in varying sizes.

All these make the procurement function in the chemical industry very challenging. This article outlines these issues and the potential of digitalization to address these challenges.

Introduction

The chemical industry today is a forerunner to the growth trends of a host of interdependent sectors in the manufacturing ecosystem. The role of the CPO in a critical sector like chemical goes beyond the apparent cost reductions and stability of material sourcing. The new-age CPO in the chemical industry needs to accept supply chain complexities, vendor consolidation, and innovations in packaging and distribution to tap the tremendous growth potential in the sector.

The opportunity in the chemical sector is red-hot, and India finds itself in an enviable position to cash in due to our geo-location advantage, tremendous demand from developed markets, and the global shift away from Chinese vendors amid policy change and lockdown unpredictabilities. According to a McKinsey report on the sector, the Indian chemical industry has outperformed global benchmarks regarding total return to shareholders (TRS). Since 2014, the compound annual growth rate (CAGR) for TRS in India has been 15%, double the global average, and remained steadfast even in the economically weak period of 2016-19.

Bridging the Divide: Challenges at the doorstep of chemical procurement leaders
The procurement supply chain in the chemical sector has a unique set of complexities compared to the industry average. This makes the life of procurement officers challenging, and simultaneously demands innovation and efficiency.

The ever-broadening scope of the supply chain

Chemical procurement leaders need to look at a host of ancillary products along with core production and raw materials. Due to the nature of chemicals and corrosion, there is a tremendous demand for replacing infrastructural elements, such as pipes, valves, and flanges. Chemical handling complexities create a need for specialized lab equipment, safe transportation, and storage options. This varied demand leads to a bloated supplier list and the need to manage multiple mini supply chains in tandem. Vendor consolidation and tracking are good tools for procurement officers to have.

The complexities of vendor management

With many specialized vendors, organizations will face challenges of timing, logistics costs, dependability and quality. Transportation of materials is a crucial challenge. Material and human safety, temperature control and safety of packaging are essential to smooth operations. The general tendency is to prioritize local vendors for high volume requirements; hence monitoring vendor performance and helping them overcome issues of credit and transportation become critical for large procurers. Real-time tracking and predictability of bottlenecks alleviate these procurement challenges.

Need for innovation and stability in packaging

As every chemical industry CPO will attest, spillage continues to be a significant concern for every industry player. Due to the hazardous nature of chemicals, storage and transportation is very complex and need specialized training to manage. While glass is the primary choice of storage due to its excellent properties, it is also brittle and prone to breakage. Other alternatives like plastics, metal drums and large volume containers are suitable for certain materials, making the packaging material’s choice very critical.

A shift in global procurement trends

India has evolved into an attractive investment destination for downstream chemical opportunities. Several global oil and gas manufacturers expect an increased focus on petrochemicals in India to enable specialty material production. With China’s tighter regulations and financing challenges, prominent Indian players should seize the initiative by increasing self-reliance and production capacities. India’s proximity to the Gulf region – the world’s primary supplier of petrochemical substances – puts us at a unique advantage in consolidating a larger global market share. Again, the CPO needs a robust end-to-end procurement platform to help navigate international policy and multi-vendor management.

A positive shift towards sustainability

End consumers are increasingly veering towards a positive brand image by compliance with sustainability guidelines in materials and distribution. Procurement chiefs have to navigate these demands by encouraging innovation in raw material sourcing and ensuring supplier compliance and new-age packaging solutions. Innovation requires agility as the nature of procurement could change based on supplier location and pricing considerations. Sustainability is the future and could soon become a higher prioritization parameter than even price.

The advent of digital transformation in the chemical industry

Though the chemical industry is no stranger to digitalization, the pandemic has accelerated the adoption of innovation-led technologies, including but not limited to remote operation centers, industry 4.0, robotics, and autonomous operations in warehouses and logistics. As per the 2020 survey of industry executives by EY, 66% of leaders in the chemical industry expect revolutionary and disruptive effects in digitalization to double and triple, respectively, within the next three years, leaving no business function behind.

Going back to the pre-pandemic model seems like a far-fetched thing now that greater cost-efficiencies are achieved through optimized supply chains and collaboration tools brought on by technology-enabled abilities and insights. A recent McKinsey survey of the European Chemical Industry showed that about 55% of buyers of petrochemical products would prefer to adopt digital channels if efficient and value-adding platforms were available. The share is even higher for specialty channels, with about 82% of customers willing to adopt digital platforms.

The development of a successful digital platform is not an overnight job. It needs a lot of consideration and understanding of the current customer demands along with an overarching digital strategy that focuses on culture, technology, talent, and business processes. Meticulous market research of customer metrics and the problems that need to be addressed also falls under this radar. Digitalization has tangible advantages for procurement supply chains:

1. Vendor consolidation and management
2. Catalog-based, AI/ML-based purchasing to get the best price
3. Vendor quality monitoring and improving benchmarks of timeliness, loyalty and logistics efficiency
4. Flexibility in vendor selection and a plan B approach to logistical breakdowns
5. End-to-end dashboards for visibility and course corrections ensure a seamless customer experience.
6. Access to data at all supply chain linkages ensures better communication and reporting for the benefit of all stakeholders.

How Indian companies tap the latent growth potential in the chemical industry and global focus on India can shape the economic outlook for our GDP. Procurement leaders need solutions to the most pressing challenges to unlock new revenue streams and insulate organizations from market fluctuations.