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Chemical players bank on markets other than EU for exports

Economic uncertainty in Europe prompts firms to explore US, Australia and Asia

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Amid weak economic sentiment in the European market, Gujarat-based exporters of fine chemicals have started looking at non-European destinations to keep up the pace of growth in the overseas business. Industry sources informed that Gujarat's fine to has reduced significantly from about 50 per cent of the total fine chemical exports earlier to close to 20-25 per cent now.

The companies that had larger exposure to (EU) have curtailed their operations with European countries and diverted the same to non-European destinations like the US, Africa and Australia. A shift in market has helped companies to sustain their overseas earnings even in the weak financial condition of European nations.

"The dependence on European market has reduced significantly and now Europe's share in total exports of chemicals is not more than 20 per cent. Companies have strategically diverted their markets from Europe to other potential markets like US and Africa," said a senior government official at Dahej SEZ Ltd.

Dahej SEZ, is one of the largest cluster of chemicals and petrochemicals units. The SEZ has 12 operational units with total exports from the SEZ during 2011-12 crossing Rs 800 crore, significantly up from Rs 429 crore in the previous year.

DIC Fine Chemicals Pvt Ltd, one of the leading chemicals players in fine chemicals space, exported around Rs 200 crore worth of printing ink last year to countries like Australia, North America and Africa from its unit at Dahej SEZ.

"We are not much affected due to economic weakness in the European market. Our exposure in the European market is less and we are more focused on other non-European markets," said a senior official of the company.

According to industry estimates, Gujarat contributes around 60 per cent to India's overall chemicals exports worth about Rs 40,000 crore.

However, recently volatility in currency rates and financial instability in the European nations hampered growth prospects for chemicals exporters.

The growth in the export business has already been affected. Against the normal 12-15 per cent exports growth in fine chemicals space, the industry has registered around 8-10 per cent growth in 2011-12. While the scenario remains dull even this year as well.

"Dollar volatility and economic uncertainty in European market is hampering growth prospects in export business. However, several alternate markets like Asia, Australia, US and Africa have shown good potential. Neighbouring countries like China, Bangladesh and Pakistan have become good buyers of Indian chemicals," said Bhupendra Patel, chairman, Gujarat region - Chemexcil.

As per the data provided by directorate general of foreign trade (DGFT) export of India's chemicals and related products for the period of April-September 2011 stood at Rs 64,461.70 crore, showing a growth of 21 per cent over the same period previous year. Chemicals and related products constituted 8.1 per cent of the country's total exports.

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