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By:

Akhilesh Sinha

25 June 2025 at 2:53:54 pm

Nadda's strategic meet signals urgency for chemical sector

New Delhi: As war simmers across the volatile landscape of West Asia, whether in the form of a direct confrontation between Israel, United States and Iran, or through Iran's hybrid warfare involving groups like Hezbollah and the Houthis, the tremors are no longer confined to the region's borders. They are coursing through the arteries of the global economy. India's chemicals and petrochemicals sector, heavily dependent on this region for critical raw materials, finds itself among the earliest...

Nadda's strategic meet signals urgency for chemical sector

New Delhi: As war simmers across the volatile landscape of West Asia, whether in the form of a direct confrontation between Israel, United States and Iran, or through Iran's hybrid warfare involving groups like Hezbollah and the Houthis, the tremors are no longer confined to the region's borders. They are coursing through the arteries of the global economy. India's chemicals and petrochemicals sector, heavily dependent on this region for critical raw materials, finds itself among the earliest and hardest hit by this geopolitical turbulence. It is in this backdrop that the recent meeting convened by Union Minister for Chemicals and Fertilisers J. P. Nadda at Kartavya Bhavan must be seen not as a routine consultation, but as a signal of strategic urgency. India's ambition to scale this sector from its current valuation of $220 billion to $1 trillion by 2040, and further to $1.5 trillion by 2047, will remain aspirational unless the country confronts its structural vulnerabilities with clarity and resolve. India today ranks as the world's sixth-largest producer of chemicals and the third-largest in Asia. The sector contributes 6-7 percent to GDP and underpins a wide spectrum of industries, from agriculture and pharmaceuticals to automobiles, construction, and electronics. It would be no exaggeration to call it the backbone of modern industrial India. Yet, embedded within this strength is a paradox. India's share in the global chemical value chain (GVC) stands at a modest 3.5 percent. A trade deficit of $31 billion in 2023 underscores a deeper issue: while India produces at scale, it remains marginal in high-value segments. This imbalance becomes starkly visible when disruptions in West Asia choke the supply of key feedstocks, shaking the very foundations of domestic industry. Supply Disruption The current crisis has laid this fragility bare. Disruptions in the supply of LNG, LPG, and sulfur have led to production cuts of 30-50 percent in several segments. With nearly 65 percent of sulfur imports sourced from the Middle East, the ripple effects have extended beyond chemicals to fertilisers, plastics, textiles, and other downstream industries. Strategic chokepoints such as the Strait of Hormuz have witnessed disruptions, pushing shipping costs up by 20-30 percent and adding further strain to cost structures. This is precisely where Nadda's emphasis on supply chain diversification and resilience appears prescient. In today's world, self-reliance cannot mean isolation; it must translate into strategic flexibility. While India imports crude oil from as many as 41 countries, several critical inputs for the chemical industry remain concentrated in a handful of sources, arguably the sector's most significant vulnerability. Opportunity Ahead A recent report by NITI Aayog outlines a pathway to convert this vulnerability into opportunity. It envisions raising India's GVC share to 5-6 percent by 2030 and to 12 percent by 2040. If achieved, the sector could not only reach the $1 trillion mark but also generate over 700,000 jobs. However, this transformation will demand more than policy intent, it will require sustained investment and disciplined execution. The most pressing challenge lies in research and innovation. India currently spends just 0.7 percent of industry revenue on R&D, compared to a global average of 2.3 percent. This gap explains why the country remains largely confined to basic chemicals, even as the world moves toward specialty and high-value products. Bridging this divide is essential if India is to climb the value chain. Equally constraining is the fragmented nature of the industry. Dominated by MSMEs with limited access to capital and technology, the sector struggles to compete globally. Cluster-based development models offer a pragmatic way forward, such as PCPIRs and the proposed chemical parks.

Gold and Silver Smart Investing

For most Indian households, Dhanteras marks the beginning of Diwali - a day when buying gold or silver is considered auspicious. Beyond the emotional and cultural significance, these metals have been time-tested stores of value, preserving purchasing power through generations.


However, in today’s era of convenience and transparency, investors no longer need to buy physical jewellery or coins to participate in the precious metals story. There are far smarter, cost-efficient, and safer ways to invest - especially through mutual funds.


Option 1 – Gold Mutual Funds: Purity Without Storage Hassles

For those who wish to stick purely to gold, a Gold Mutual Fund is a clean and convenient option.


Benefits:

• No risk of theft or impurity

• No storage or safety issues, and no need for lockers

• Easy liquidity as even partial redemption is possible

• Systematic investment options such as SIP, STP, and SWP


Gold has historically provided stability during periods of high inflation or market volatility. Over the long term, it can act as a hedge - balancing the risk in a predominantly equity-driven portfolio and also helping to beat inflation.


Option 2 – Gold and Silver Mix Funds: Broader Precious-Metals Exposure

Investors seeking to diversify beyond gold can choose a Gold and Silver Fund. These products invest in both metals, and the internal mix is at the discretion of the fund manager.


By combining gold’s defensive nature with silver’s industrial growth story, investors get a well-rounded exposure to the entire precious-metals space. Silver also benefits from its increasing use in solar panels, electric vehicles, and electronics, adding an element of industrial demand to the portfolio.


Option 3 – Multi Asset Funds: A Balanced All-Weather Portfolio

For those who do not want to bet solely on precious metals, Multi Asset Allocation Funds offer an intelligent blend.


These funds typically invest 50 percent in equity, 10 percent in gold and/or silver, 10 percent in debt, and the rest dynamically as per the fund manager’s view.


This mix ensures that when one asset class underperforms, another often compensates. The result is steady compounding with lower volatility, making it ideal for long-term wealth creation.


Festive Investing, Rational Thinking

While tradition encourages buying gold on Dhanteras and Diwali, modern investing is about blending emotion with logic. Instead of locking money in jewellery that offers no returns, channel it into financial instruments backed by gold and silver - where purity, liquidity, and performance come together.


So, this Dhanteras and Diwali, invest not just for prosperity today, but for financial security tomorrow.


Because true wealth is not about what shines - it is about what grows.


(The author is a Chartered Accountant and CFA (USA). Financial Advisor. Views personal. He could be reached on 9833133605.)

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