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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.

Washington’s Risky Tango with Pakistan

America’s renewed embrace of Pakistan may be aimed at countering China, but it risks reviving ghosts that may return to haunt the US.

Whenever Washington turns its gaze back to Islamabad, history usually repeats itself. The recent signs of a U.S.–Pakistan thaw - amplified after India’s stunning success in Operation Sindoor badly mauled Pakistan - suggest that a familiar choreography is underway. The ‘Pakistan–U.S. tango,’ as some analysts call it, appears to mark a new phase in America’s South Asia policy under Donald Trump’s second presidency.


The buzz in Washington and Islamabad alike has been loud. A widely publicised meeting at the Oval Office, attended by President Trump, Vice President J.D. Vance, Secretary of State Marco Rubio, Pakistan’s Prime Minister Shehbaz Sharif and Army Chief Gen. Asim Munir, left few doubts that the two sides are back in conversation. Reports suggest that a range of bilateral matters were discussed - from the opening of Pakistan’s rare-earth deposits to U.S. mining firms, to cooperation on counter-terrorism. India, one can safely assume, figured prominently in the subtext.


Uncomfortable echoes

For India, this re-engagement carries uncomfortable echoes of the past. Commentators critical of the Modi government have interpreted the development as an alleged failure of New Delhi’s diplomacy and a diminishment of India’s geopolitical influence.


From the American perspective, this pivot towards Pakistan has a clear strategic calculus. The U.S. seeks to counterbalance China’s widening footprint in the region - from Gwadar port to the China–Pakistan Economic Corridor - and perhaps to loosen Beijing’s hold over Islamabad. Yet this approach, while tempting on paper, risks undermining India’s stature and the logic of the Indo-Pacific partnership that Washington itself helped shape.


Pakistan’s dependency on Beijing remains entrenched. China remains its largest creditor, investor, and weapons supplier. A U.S. attempt to re-court Islamabad, therefore, may serve only to give Pakistan fresh leverage - both with China and, more dangerously, against India.


Double standards

A reinvigorated U.S.–Pakistan partnership could embolden Islamabad to act with greater confidence in its dealings with New Delhi, particularly on cross-border terrorism. While Washington praises Pakistan’s cooperation against groups such as ISIS-K and the Balochistan Liberation Army (BLA), its silence on Pakistan-backed anti-India outfits like the Lashkar-e-Taiba and the Jaish-e-Mohammed speaks volumes. This double standards on part of the US of overlooking inconvenient facts when strategic expediency demands it is hardly new


Equally troubling is the possible resumption of military aid or F-16 component supplies to Pakistan, which would alter the region’s delicate military balance. For India, now one of America’s major defence partners, such moves cut against the grain of recent trust-building.


Then there is the naval dimension. Islamabad’s proposal for U.S. involvement in developing the Pasni Port in Balochistan, barely 300 kilometres from India’s Chabahar Port in Iran, adds another layer of complexity to maritime competition in the Arabian Sea. The project, if realised, would insert American commercial and security interests uncomfortably close to India’s own sphere of influence.


For decades, Washington has treated Pakistan as a convenient pressure valve in its dealings with India. The current rapprochement threatens to revive that tendency. By warming to Islamabad, the U.S. gains a tool to nudge India on three key fronts.


First, it can constrain India’s pursuit of strategic autonomy which has been a policy cornerstone since the Cold War. New Delhi’s refusal to become a formal ally has long frustrated successive U.S. administrations. Engagement with Pakistan could thus serve as a quiet reminder that autonomy has limits.


Secondly, the U.S. hopes to disrupt India’s continued trade with Russia. Sanctions and tariffs against Indian firms over oil imports and technology transfers have been justified in Washington as upholding the global rules-based order. Yet no such censure applies to Pakistan, the EU, or even the U.S. itself in their commercial dealings with Moscow.


More broadly, America’s dual embrace of both India and Pakistan risks eroding the credibility of its rhetoric. Calling India a “comprehensive strategic partner” rings hollow when Washington simultaneously revives military cooperation with Islamabad.


India’s Imperatives

For New Delhi, the response must be guided by prudence rather than paranoia. India has weathered such oscillations before. It should continue to pursue its long-standing objective: to maintain strategic autonomy while engaging with all major powers on equal terms.


That means that India must continue to assert its independent foreign policy, resisting the temptation to be drawn into any singular alliance structure. It must focus relentlessly on strengthening its economic and military foundations. A $4 trillion economy with deep technological capabilities offers far more long-term value to Washington than a financially strained Pakistan. Over time, the logic of scale will reassert itself.


India should practise cautious engagement by monitoring U.S.–Pakistan developments without public rancour. Diplomacy, not diatribe, will better protect India’s interests.


Each time Washington returns to Islamabad, the pattern unfolds predictably. Enthusiasm gives way to frustration and disappointment. The U.S. relied on Pakistan during the Cold War, only to be disillusioned by its duplicity. After 9/11, it lavished billions in aid, only to see much of it diverted to support militant proxies. The present ‘tango’ risks ending on the same discordant note.


For India, the imperative is to stay the course: to safeguard its autonomy, deepen its partnerships with multiple powers, and remind Washington of where its true long-term interests lie.


The United States may flirt with Pakistan to score tactical points against China, but India remains the strategic prize - a vibrant democracy, an ever-burgeoning market and a maritime power whose rise is central to the balance of Asia. For history suggests that America’s dance with Pakistan rarely ends well.


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

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