The Chemicals & Alkali Merchants' Association (CAMA) has played a major role in taking up the cause of the trading community with the government. In an interview with The Financial Express, the newly appointed president of the association Jayendra Sheth, spoke about the role of CAMA as well as the current scenario within the chemical industry.

Jayendra Sheth, has over 30 years of experience in the trade and operates through his firm Dia-Chemie which is involved in trading pharmaceutical raw material,chemicals and solvents. He is also in the indenting business through his firm Apt International.

On the priorities confronting CAMA

One of the major problems confronting the chemical trading community today is indirect taxes. We have taken up the matter of hike in sales tax from four per cent to 13 per cent with the authorities and are hoping for a positive response. Similarly, with regard to the 100 per cent increase in octroi charges, we have taken up the matter with the mayor of Mumbai, along with other trade bodies and are expecting an amicable solution.

Also, CAMA will be going global, by launching a website of its own. This will give a major boost for the trading community in the country.

On the changes in the trading business over the 30 years

One of the major changes observed has to do with the increase in the imports of chemicals. This was mainly due to the government's policy of reducing import duty and of liberalisation. The business has seen an increased activity afterthe exit of the licence raj. As a result of the robust growth of the chemical industry, the number of traders has also increased. When I started business 30 years ago there were hardly 300 traders in Mumbai, but now this has gone up to around 4,000. Better infrastructure facilities like facsimiles and modems have also contributed to the increase in the number of players. Earlier, Mumbai was the main hub of the chemical trade. The trade has now spread to Gujarat, Hyderabad and Delhi. With the setting up of new plants near Calcutta like the Haldia unit, activity is likely to increase in the eastern region.

Also, volumes traded by traders has gone up considerably. Earlier, traders used to order just five to 10 tonnes of material, this has now gone up to 50 to 100 tonnes. Imports are now taking place in container loads. In short, the carrying capacity of traders has increased.

On the fragmented nature of the trade

Unlike in developed countries, where there are a few big players, the scenario inIndia is different. This is mainly because of the large number of small-scale manufacturers in the country. Requirement of a chemical by the small-scale manufacturer is to the order of a few number of drums. They are not able to procure material in tanker loads, which is the minimum quantity that the large-scale sector (who dominate the chemical feedstock sector) generally gives. To fill this gap, the industry has a large number of small traders.

On the current scenario of the industry

Currently the scenario is not very good. Many companies, specially in the small-scale sector have closed down. Increasing imports has resulted in domestic players cutting down their prices and which has hurt them badly. Imports of solvents like methylene di-chloride (MDC), dimethyl amine (DMA), acetone, butanol, ethylene di-chloride (EDC), ortho-xylene, methanol and methyl iso-butyl ketone (MIBK) has increased considerably.

Imports of bulk drugs has also been on the rise, which has also resulted in lowerprices.

On the export front too, exports of some major bulk drugs like sulphame thaxazole (SMX) and trimethoprim (TMP) this year has been lower than in the previous year. One of the major problems of the Indian producer is the high cost of power which makes them very uncompetitive as compared to China, whose power cost is almost one-third of ours.

On the future of the trading community

Traders, unlike in previous years will have to be more equipped. They will have to concentrate more on after sales service and educate themselves on the technical aspects of the products they trade in. Increased import activity is likely to keep traders busy. However, if the current depression persists, smaller traders would feel the pinch. Though foreign traders are not a major threat currently, they could create problems in future.