The dyes and intermediate chemicals industry in Gujarat is witnessing a significant uptick in demand and operational activity, with manufacturers expressing optimism for the coming months. This positive shift comes as long-standing global supply chain disruptions begin to ease, allowing the sector to breathe a sigh of relief.
Post-Diwali Recovery in Capacity Utilisation
Industry executives report a marked improvement in plant operations compared to the challenging period before the Diwali festival. Ankit Patel, Vice-Chairman of the Chemicals Export Promotion Council (Chemexcil), revealed that plants are now operating at an average capacity utilisation of 55-60%. This is a substantial recovery from the sub-50% levels seen before Diwali, when the industry was grappling with a much tougher environment.
"The situation was much more difficult before Diwali when average capacity utilisation was languishing around 40-45%," Patel stated. He acknowledged that the chemical industry continues to face stiff challenges, but the current trajectory is encouraging. A key driver of this recovery is the improving demand from core user industries like textiles and leather.
Global Factors and Export Dynamics
The industry's fortunes are closely tied to international markets. Ankit Patel pointed out that resolving the US tariff impact on global trade could lead to a surge in demand. Furthermore, geopolitical tensions have previously dampened orders from Europe, another critical market.
Providing a regional perspective, Bhupendra Patel, Chairman of Chemexcil's Gujarat region, highlighted a silver lining in the Indian rupee's depreciation. While making imports more expensive, the weaker currency has boosted the competitiveness of Indian exporters. "We have become more competitive in international markets, and exporters are able to quote better prices due to improved margins with a strong dollar," he explained, calling it a blessing in disguise.
The export landscape for dyestuff manufacturers is diverse. Approximately 60% of their export business originates from a mix of regions including Europe, Bangladesh, the Middle East, China, Hong Kong, Dubai, Indonesia, and Turkey.
Gujarat's Formidable Chemical Hub
Gujarat's strength in this sector is underpinned by a vast manufacturing base. The state is home to more than 3,000 chemical manufacturing units, with around 80% of them being Micro, Small, and Medium Enterprises (MSMEs). Over the years, several major chemical clusters have emerged, solidifying the state's position as a global supplier.
Key industrial clusters such as Vatva, Naroda, Vapi, Ankleshwar, and Padra house numerous companies that supply a wide array of chemical products to the international market. The recent improvement in sentiment and capacity utilisation signals a potential period of growth for this vital industrial segment, contingent on stable global trade conditions.
