Dyes & Pigments: Technology upgradation is need of the hour Mon, 07 Feb 2011 18:30:00 GMT The Indian

dyestuff Industry, which was primarily started to cater to the needs of domestic textile business, now not only meets more than 95% requirement of th e domestic market, but has gradually also made a dent in the global market. Indi a is now exporting dyes and dye intermediate to the very same countries, on whic h it was dependant for imports in the pre-liberalization period. The dyestuff in dustry, which is only 40 years old, consists of three sub-divisions namely dyes, pigments and intermediates. Dyes are soluble and essentially used in textile pr oducts. Pigments, on the other hand, are insoluble and are important inputs to p roducts such as paints. All ranges of dyes such as disperse, reactive, vats, pig ments and leather dyes are now being manufactured in India. The dyestuff sector is one of the most important segments of the chemicals indus try in India, having forward and backward linkages with a range of sectors like textiles, leather, plastic, foodstuffs, paper, packaging, printing inks, paints and polymers etc. forming an important link in the chain. Textile industry is th e largest end user accounting for 60% of the industry production followed by lea ther (20%) and paper (8%). The growth of the industry is mainly dependant on the demand trends in textiles, leather and paper industries which together accounts for 88% of the total market for dyes and dye intermediates. Industry Basics Dyestuff is a broad term which includes dyes and pigments. This industry is base d on chemicals derived from coal tar and the petrochemical industry. A dye is a colored substance or an organic compound, which when applied in a solution to a fabric, imparts a color resistant to washing. Dyes are classified according to v arious systems. The most commonly used one is the one adopted by the US Internat ional Trade Commission. According to this system, there are 12 types of dyes. Th e basic raw materials used for the manufacture of dyestuff are Benzene, Toluene, Xylene and Naphthalene (BTXN). These raw materials are initially transformed in to dye intermediates by nitration, sulphonation, amination, reduction and other chemical unit process. Further, the formulation and reaction of the intermediates viz. diazotition and coupling of the intermediates are carried out for the manufacture of a particula r dyestuff. Meanwhile, the technology employed by the dyes sector in India has b een well received in the International market. The dyestuff industry has nearly 950 small scale units and 50 large units manufacturing dyes, dyestuffs and pigme nts, with a total capacity of 160,000 tonne. Of this, production capacity of pig ments is estimated at 40,000 tonne per annum (tpa), half of which is in the smal l scale sector. Two states viz. Maharashtra and Gujarat account for around 90% o f the total dyestuff production in the country. The dyestuff industry in Gujarat substantially contributes in production as well as to the domestic consumption and export basket of the country s target. Current Scenario Over the last 15 years the Indian dyestuff industry has established itself in th e export arena and among the various types of dyes exported, export of reactive dyes accounts for the largest share and growth. The industry today is totally se lf-sufficient with a majority of its inputs manufactured locally. India is curre ntly producing all varieties of synthetic dyestuffs and intermediates and has a small presence in the natural dyestuff. The subcontinent has emerged as a global supplier of dyestuffs and dye intermediates, particularly for reactive, acid, v at and direct dyes. The sector, which has immense growth potential due to increa sed regulations across western country, is facing stiff competition mainly from China. India s dyes and pigment segment is highly fragmented, with the top five play ers controlling 32% of the total market, whereas big size of each unit is an adv antage (economy of scale) for China. China, Korea, India, Thailand, Japan and Ta iwan are the major players in this industry in Asia. However, European countries continue to remain the largest producers because they have concentrated on spec ialty products. The growth in exports has resulted in higher growth, apart from the domestic dem

and from the textiles sector, while demand from other sectors such as leather, p aper, food processing, printing and paints is growing at a stable rate. Further, exports of dyes are also expected to increase by 6.4% due to the shift of produ ction bases from developed countries to India on account of stringent pollution control measures being adopted in those countries. Major markets for Indian dyes tuffs are the European Union, US, Indonesia, Hong Kong, South Korea and Egypt. T he segment is opening up to more and more areas of applications like Contact Len ses, Biomedical applications - Forensic science, Laser, OLED Displays, CDs, Sola r Cells and Digital Printing. The field of New Applications of Dyes is likely to grow. It is already finding applications in early detection of Alzeimer, Arthri ritis, Parkinsons, Dementia, Cancer monitoring etc. Concerns The Indian dyestuff industry is currently suffering more from overcapacity than lack of consumption. Since most of the demand for dyestuff and intermediates com es from the textile sector (more than 70%) the fortunes of the dyestuff industry are closely linked to the production and other trends prevailing in the textile sector. The bad phase witnessed by the local and global textile industry recent ly, following the global financial crisis, has adversely affected the Indian dye stuff industry as well. Further, dyes and pigments are prepared from various chemicals which are mostly derived from basic petrochemicals. The prices of the feedstock are dependent on the prices of crude oil, which has touched $100 per barrel and is eating into th e business of the companies in this industry. Steadily increasing raw material p rices and pressure on the finished goods prices, costs incurred for the developm ent of cleaner and greener technologies are other concerns of the industry. Finance is another concern since long credit periods are prevalent in the end us er industries, and dye manufactures with their limited resources, find it diffic ult to service customers under such conditions. Also, high cost of effluent trea tment, as well as old and outdated technology in small scale units is making the m unviable, resulting in their closure. Due to internal and external competition , and fragmentation, the margin of profits in the dyes industries is rapidly bei ng squeezed. The consequence is that there is low expenditure incurred for R&D. Most of the units are small and manufacture only one or two products. As such th ey are not in a position to directly market their products in the international market. They usually sell through traders, a practice that increases the final c ost by at least 5% and renders them uncompetitive. Their small size, and low pur chasing power also result in higher procurement price of raw material. Budget Expectations As the launch of Union budget nears, the industry has put big hopes on it. The i ndustry wants a special fund be allotted for setting up an R&D center. The indus try also wants government to provide incentives on the expenditure incurred on t echnology up gradation on lines of similar scheme available to the textile indus try. Also, the industry wants reduction in import duty on capital goods for technolog y up gradation. The industry wants the service tax on overseas commission to be abolished. Another demand of the industry is reduction of import duties on raw m aterials, which will make the domestic producers more competitive in global mark ets. Further, a key problem being faced by the industry is import of cheaper dyes and pigments from China. Since the Chinese players are much larger in size, the dom estic industry is placed in an unfavorable position in comparison. The dyestuff industry therefore wants the government to impose anti-dumping duty or increase of import duty on imports from China. Further, as the textile industry is the major consumer of this industry, any pos itive steps for the former like support in terms of a conducive policy environme nt to facilitate its growth, augment R&D efforts, and encourage innovation with a view to enhance productivity will also benefit dyes & pigment industry. Outlook The dyestuff industry in India has realized that in order to maintain in the mar

ket, an application of modern technologies is required and at the same time inte rnational marketing is to be adopted like the other global players. Renewed focu s on the right product profile is needed and hence higher investment in research too needs to be realized. The economies of scale have also become important for spreading costs of manufacturing. But there is no doubt that capability in maki ng continuous investments in R&D will make a difference in the industry. The industry in this wake expects the government to come up with some schemes to boost R&D, most likely by creating a dedicated fund for the matter. Further, wh ile the government is unlikely to announce some anti-dumping duty in the budget, possibility is that it will reduce import duties on raw materials for dyestuff industry. The industry is also keeping figures closed for a technology up gradat ion schemes on the lines of the one available for textile industry.