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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 Teesta Tangle: Why a River Shapes India’s Strategic Future

For India, securing the Teesta is about weathering the geopolitical tides shaping the future of South Asia.

Few rivers in South Asia have carried as much political significance as the Teesta. Rising from the snowfields of the Himalayas and coursing through the narrow valleys of Sikkim and northern West Bengal before spilling into Bangladesh, the 414-kilometre river sustains millions of farmers, powers turbines, and nourishes fragile ecosystems. Yet, for decades, it has also been a major flashpoint.


The Teesta is the fourth-largest transboundary river shared between India and Bangladesh, after the Ganges, Brahmaputra, and Meghna systems. Its 1.75-million-square-kilometre catchment supports dense populations and agriculture on both sides of the border. But its bounty is unevenly distributed. Most of its 60 billion cubic metres of annual flow rushes downstream between June and September, while the lean months from October to April leave the basin parched. This seasonality has turned the Teesta from a river of life into a source of friction.


A river divided

India and Bangladesh have sparred for years over how to share its waters. In the 1980s, both sides agreed in principle to an equitable arrangement, and by 2011, a draft accord proposed that India would receive 42.5 percent and Bangladesh 37.5 percent of the flow. But the deal faltered when West Bengal’s government objected, arguing that reduced supplies would devastate farmers in the state’s northern districts, who depend heavily on Teesta irrigation. Since then, every bilateral dialogue between Delhi and Dhaka has been shadowed by the unresolved river.


Bangladesh’s grievances have deepened with India’s construction of the Gajoldoba Barrage, which it says diverts excessive water upstream. During the dry season, when the Teesta trickles across the border, Bangladeshi farmers find themselves watching crops wither. India counters that its own needs for irrigation, power generation and flood control are legitimate. The stalemate has produced not just ecological stress but diplomatic fatigue.


Enter China

Into this fraught landscape has waded China. Over the past few years, Beijing has proposed funding and assisting Bangladesh in developing the Teesta River Comprehensive Management and Restoration Project, offering more than $1 billion in investment. On the surface, the plan promises dredging, embankments, and modern irrigation networks. But its geopolitical undertones are unmistakable.


For China, the Teesta project is another link in its long chain of influence across South Asia, stretching from the China-Pakistan Economic Corridor to port developments in Sri Lanka and the Maldives. A presence on the Teesta would place Beijing within strategic sniffing distance of India’s so-called ‘Chicken’s Neck,’ the Siliguri Corridor, a narrow 22-kilometre-wide land bridge connecting mainland India to its northeastern states. Any Chinese-funded infrastructure there would set alarm bells ringing in Delhi.


India’s concern is not just geographic. The Teesta imbroglio has begun to test its diplomatic credibility. Bangladesh, long one of India’s closest partners in the region, has grown increasingly vocal about its unmet expectations. Chinese investment, by contrast, appears fast, generous, and visible. If Beijing helps Dhaka turn the Teesta’s silted channels into gleaming canals, it could win a symbolic victory.


Alarmed by China’s interest, India has offered its own assistance to Bangladesh in reviving the Teesta project, proposing technical and financial collaboration. The challenge lies in reconciling national security priorities with domestic politics. West Bengal’s government, led by Mamata Banerjee, remains fiercely protective of its share of water, viewing any reduction as a betrayal of its farmers. Until Delhi can forge consensus at home, it will struggle to make credible commitments abroad.


High stakes

The strategic stakes are high. Losing the Teesta project to China would erode India’s influence in Dhaka, complicate cooperation on the 54 other transboundary rivers the two countries share, and embolden Beijing’s steady encirclement strategy in the eastern Himalayas and Bay of Bengal. It could also inflame anti-India sentiment in Bangladesh, where public opinion has grown more sensitive to perceived inequities in resource sharing.


The Teesta is not merely a diplomatic irritant; it is a vital artery for India’s own economic and environmental stability. The Teesta Barrage Project — one of eastern India’s largest — supplies irrigation to six northern districts of West Bengal, underpinning agriculture that sustains millions. It also drives hydropower projects such as Teesta-V and Teesta-III, and the barrage itself is designed to generate 67.5 megawatts from canal falls. For a region where agriculture remains the lifeblood of the economy, predictable water flow means predictable livelihoods.


Equally important is the river’s ecological role. The Teesta basin harbours rich biodiversity, from alpine meadows in Sikkim to floodplains in northern Bengal. Poorly managed water diversion threatens these fragile ecosystems, risks salinity intrusion, and can intensify floods and droughts downstream. A coordinated river management approach is essential to preserve both livelihoods and landscapes.


If India wishes to retain its strategic and moral authority in the region, it must act with greater urgency and imagination. First, it should institutionalise transboundary water governance through data sharing, joint monitoring, and basin-wide planning, rather than treating each river as a separate bargaining chip. Second, Delhi must address domestic dissent by engaging with West Bengal to craft compensatory measures to ease fears of water loss.


Third, India and Bangladesh could explore co-financing and co-management of the Teesta project, turning it into a model of regional cooperation rather than confrontation. Shared benefits could demonstrate that water diplomacy need not be a zero-sum game. Such collaboration would also blunt China’s leverage, showing that regional challenges can be met with regional solutions.


The Teesta may seem a modest river compared with the Ganges or Brahmaputra, but its political current runs deep. At stake is the credibility of India’s neighbourhood-first policy and its ability to resist external encirclement.


(The author is a retired Naval Aviation Officer and a defence and geopolitical analyst. Views personal.)

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