How can Indian Paint Industry stop relying on imports of raw materials from China

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The paint industry relies on imports of Titanium Di Oxide (T1O2) from China when India has it abundance.

The paint industry in India has been grappling with sluggish real estate, lower construction and a dip in automobiles sales at one end and then the volatile crude prices and adverse forex movements on the other end due to the loss of their domestic raw material supply sources with the closure of the Indian mineral sands mines. Now comes the new challenge in the form of unstable prices Titanium di oxide (Ti02) and availability. Around 300 to 400 ingredients go into making of decorative paints. Out of this, the major raw material, TiO2, a white pigment, constitutes about 12-35% and is derived from ilmenite. More than 60 percent of the input costs of paint manufacturing go into procuring raw materials.

Recent policy reversals by the Government has affected the local paint manufacturers badly and they have to depend on raw material imports of TiO2 from China, yes China, which, due to large expansion in recent years based upon their own domestic supply of ilmenite, happens to be the worlds’ leading producer and exporter of Ti02. In the world market TiO2 has been undergoing immense volatility with manufacturers developing mechanisms to stabilise the prices. India, in spite of its high Ilmenite reserves, finds itself wanting and lost when it comes to the derivatives from Ilmenite, particularly TiO2 and hence paint. This needs to be addressed immediately. Paint manufacturers should ideally be given adequate impetus to rely on their own captive production of TiO2 or should be made to source it locally as was the case up until late 2016. It may sound like a viable solution but then with the government’s regulatory mechanism choking the mineral mining sector even that possibility seems very distant. Without raw materials is it not possible to Make In India.

The myopic canalisation through Indian Rare Earths (IRE) introduced by the government in 2018 was aimed to curtail the direct private sector export of beach sand minerals and their major mineral products – Ilmenite, rutile and zircon. Now the assumption made was that the IRE will be able to effectively manage and help the domestic production has almost backfired. IRE has not been able to fulfil the demand (and in fact has reduced production over this time) by the paint industry forcing them to rely heavily on China for supplies. To take inefficiency further they have not even been able to buy from private companies and supply to the domestic paint industry. Of the world Ilmenite production of 175 lakh tonnes India exported 11 lakh tonnes Ilmenite. Ti02 (produced from Ilmenite), required by the paint industry, India’s production was at an embarrassing 0.50 lakh tonnes against a domestic demand of 2.20 lakh tonnes. This means that India had the raw material for producing TiO2 but preferred importing it. Instead of pushing the regressive canalisation agenda the government should have encouraged the Indian paint companies to stop importing TiO2 and producing it domestically in line with the Make In India initiative.

In the year 1998 when the government opened the Mineral Mining to private sector India made significant strides in world trade and crawled its way to the top with regard to export to minerals. That was the outcome of liberalisation. In the guise of taking it forward the government has more or less taken the industry back in time by more than 20 years. Last year 2019 National Mineral Policy dealt another blow when the private mining lessees for beach sand minerals had to relinquish their rightful mining leases. The aim, ostensibly, was to promote domestic industry and to reduce Import Dependency to feed the Make In India initiative.

National Mineral Policy 2019 is itself contradictory. The Policy insists that the regulatory environment is actually conducive to the ease of doing business with simpler, transparent and time-bound procedures, for obtaining clearances. Instead of bringing in systemic reforms in a sustained and phased manner it dealt a sledgehammer like blow to the paint industry and the state revenues and to employment overall.

The industry is hopeful that given the current situation the government will pull all stops to get economy back on its feet. If providing employment is important in the coming days, then the government must make sure that the paint industry must be freed of its shackles and it must become self reliant in the true sense.

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