In a paper presented at a forum of Gujarat Investors' and Shareholders' Association recently, he said, multinational companies (MNC's) with saturated overseas market intend to set up large facilities in India. ``Their strategy would be to ensure the trade and tariff barriers as well as other investment impediments were diluted to their advantage,'' he said.

In his opinion, the Indian chemical industry could still catapult itself to the top slot in select sectors -- notably fertilisers, synthetic fibres and speciality chemicals.

"They (MNCs) know that with over 17 per cent of world population, India accounted for just 1.5 per cent of the global chemical output and 1.3 per cent share in trading globally. They see an assured growth in future demand with an annual growth rateof 2 per cent in population and a steady improvement in quality of life.

Its about time the domestic chemical industry gear up to tap the emerging challenges within the home market."

Today, he said, the chemical industry represented about 12 per cent of the country's total manufacturing output, 8 per cent of exports and 12 to 14 per cent of total import bill. Almost four-fifths of the Rs 60,000-crore invested in the country are concentrated in five states, viz, Maharashtra, Gujarat, Tamil Nadu, Uttar Pradesh and Andhra Pradesh.

Jain said the state of dyestuff and intermediates industry in the country was comparatively better. The aggregate installed capacity of this industry was now around 70,000 tpa, which worked out to 6 per cent of the total world capacity. It was likely to receive a further boost following several MNCs according the status of `corporate manufacturing mining site' to India (also China).

However, he regretted that despite availability of raw materials, techno-managerial manpower,supportive government policies and infrastructure developed by respective state governments, the industry has not been able to develop the competence to withstand the competition from global players, particularly from cheaper imports.

He said that even after coming out of the licencing raj and restrictive regulations like monopolies and restrictive trade practices (MRTP) and the foreign exchange regulations act (FERA), the industry's growth continued to be stunted. Jain pointed out that just when India slashed the import duties by one-fifth, deep international recession and slump in prices together with excessive capacity build-up in neighbouring countries led to large scale dumping of cheaper imports of chemicals in India.

He said that the recent happenings in some of the Asian countries -- due to low tariff policies, devaluation of currency and default on debt servicing, which let to closure of some units and even bankruptcy -- should be an eye-opener for our policy makers.

He said, the industry'sperformance was poorer after the post-liberalisation era in terms of annual average growth rate. It came down from 8.9 per cent during 1985-1996 came down to 6.7 per cent in 1990-96, suffering a further slump to 3.4 per cent in 1996-1997 from 11 per cent in the preceding year. The Indian chemical industry has traversed a long way since the first soap-making unit was set up at Meerut in 1889 and production of chemicals fertilisers in the organised sector began in late 1930's.

He said that India enjoyed a competitive edge over several other countries in the matter of raw materials, trained manpower resources and constructive economic policies at macro levels. The industry also needed to safety, health and environment -- crucial for sustained growth.