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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.

The Slow Death of an Aging Freighter

The sinking of MSC Elsa-3 exposes troubling questions about aging ships, weak inspections and maritime risk off India’s coast.

In the early hours of May 25, the MSC Elsa-3, a 28-year-old Liberian-flagged container feeder, sank mysteriously in moderate seas off the Kerala coast. She was on a short eight-hour voyage between Vizhinjam and Kochi, a relatively undemanding run for any seaworthy vessel. But Elsa-3 was not just any vessel. She had changed names nine times since her launch in 1997 - her first being Jan Ritscher - and appeared to be long past her prime. Her final journey ended 15 nautical miles from land, within India’s ‘contiguous zone,”’ an area where the state may act to protect its customs and environmental interests. It now also finds itself acting to address the fallout of what may have been a preventable disaster.


While carrying only 640 containers (less than half of her 1,730 TEU capacity), the Elsa-3 developed a 26-degree list to starboard before capsizing and sinking. The weather, by most accounts, was moderate, but hardly the sort that could fell a healthy vessel. Which begs the obvious question that how could a ship built to cross oceans fail on a coastal hop?


Parallels are being drawn to the 1987 Herald of Free Enterprise disaster in the English Channel, where a ferry capsized just 700 metres off the coast of Zeebrugge. That case revealed grave negligence. With Elsa-3, no definitive answers are yet available, but the circumstances are damning. Maritime experts point to several plausible causes.


One potential explanation is structural failure. A weakness in the hull could have allowed water to flood compartments, compromising buoyancy and triggering a catastrophic chain reaction. If the engine room was breached, the ship could have suffered a blackout, paralyzing all automated stability systems. Another culprit could be inaccurate container weights. Misdeclared containers can distort a ship’s balance, subjecting the hull to unsustainable shear and bending forces. In worst-case scenarios, they may tip the vessel past the point of no return, disabling its ability to self-correct - a principle known in nautical terms as ‘righting moment.’


Then there’s the phenomenon of synchronized rolling. If a vessel’s natural rolling rhythm coincides with wave patterns, it can amplify tilting to dangerous extremes. Navigational adjustments usually mitigate this risk. But that requires functioning systems and alert officers. The Elsa-3 was reportedly handicapped by an inoperative ballast transfer pump, which is a vital mechanism that allows the crew to counterbalance flooding or instability by shifting water between internal tanks. Whether this was due to equipment failure, human error, or both, is not yet clear.


For now, attention has turned to cleanup and salvage. The ship’s owners have contracted T&T Salvage, a U.S.-based specialist, to recover 360 tonnes of fuel oil and 84 tonnes of diesel from the sunken vessel. They will also attempt to retrieve any floating debris and rogue containers that are potentially lethal hazards for other vessels in the heavily trafficked shipping lanes of southern India. The Directorate General of Shipping (DGS), India’s maritime regulator, has issued alerts to mariners and local fishermen to steer clear.


But the monsoon complicates matters. Salvage operations now face the fury of southwest winds and rising seas. On the upside, the wreck lies relatively close to shore. Moreover, many of the containers on board were reportedly empty, which should ease recovery. Tugs towing recovered debris will benefit from the prevailing swell patterns, the one small mercy in an otherwise grim task.


Financially, the ship’s scrap value is modest. At a market rate of $340 per metric tonne, Elsa-3’s remains may fetch between $3 million and $3.5 million. That makes full salvage uneconomical. However, breaking up the hull and recovering high-value sections is feasible and likely. Whether the ship's insurers or owners foot the full cost remains to be seen.


The DGS, for its part, is taking no chances. It has set a hard deadline of July 3 for the salvage operation’s completion and is reportedly monitoring progress in 12-hour cycles. This unusual level of vigilance suggests that the Elsa-3 disaster may have rattled regulators. India’s maritime infrastructure, still rapidly expanding in anticipation of 2047’s centennial vision, has little patience for old, risky vessels limping between ports.


Officials have hinted that port inspections for aging ships will now be tightened. That would be a long-overdue corrective. The industry is riddled with substandard shipowners operating on thin margins and heavy appetite for risk. Ageing vessels are cheaper to charter and operate, especially under flags of convenience like Liberia’s. But the real cost in environmental risk, human lives and national credibility, is far higher.


In that sense, Elsa-3 may prove an inflection point. Much like the Herald of Free Enterprise forced European regulators to revamp safety checks, this incident could prompt Indian authorities to scrutinize the global shipping underbelly calling at its ports. It is a reminder that the ocean may be vast, but the margin for error is perilously narrow.


(The author, a former merchant navy sailor, is presently a shipping and marine consultant and member, Singapore Shipping Association)

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