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Mohan Padmanabhan

"Earlier, the market for substitutes was small, but now it is developing in India after the use of CFCs by OEMs was banned in December 2002."

Kolkata , Dec. 12

THE co-operation between industry majors in the refrigerant gases sector and the Government of India, under the umbrella of the Montreal Protocol, has given a major boost to indigenous R&D in CFC (chloro-flouro carbon) substitutes.

The Montreal Protocol warrants a total phase-out of all CFC products in the country by 2010.

Talking to Business Line, Mr S.C. Wadhwa. Vice-President (Corporate Marketing), Gujarat Fluorochemicals Ltd, and chief spokesperson of the Refrigerant Gas Manufacturers' Association (Regma), said the industry was now gearing up to effect a market-driven changeover, which may mean losses in the interim period considering the growing illegal trade in smuggled refrigerant gases.

"We, in the industry, are reconciled with this situation and fully geared to face it," he said on the sidelines of a recent meet on `Ozone-depleting Substances and Customs and other stakeholders' at Darjeeling.

On the emerging CFC substitutes scenario, he said market development was subject to creating a sound domestic consumption base.

Indian OEMs (original equipment manufacturers) are now exploring CFC-free product exports in a highly competitive environment. He said since the switchover (to a substitute such as HFC-22) was already taking place in developed countries, there is a spin-off effect in developing countries.

After all, nobody wants to invest anymore in CFC-based technologies knowing that the end is near, he said. Some players would have to set up a greenfield plant for CFC substitutes.

"We are now prepared to invest more in R&D, especially after our efforts to access technologies from the developed countries did not yield results." He said earlier the markets for substitutes were small, but now these are developing in India after the use of CFCs by OEMs was banned from December 2002, and perforce paving the way for development of substitutes on a commercial scale.

There has to be a strong domestic consumption base, as we cannot base our production on exports alone, he said.

He said the Indian Institute of Chemical Technology, Hyderabad, through a study has been able to bench-scale some of these CFC substitutes, and upgrade it to pilot scale through funds contributed by SRF Ltd and Navin Florin, along with the Department of Science and Technology and the Council of Scientific and Industrial Research.

He said though there were some integration problems, both SRF and Navin Florin, which part-financed the IICT study, have received the technology and will be upgrading it to commercial scale soon.

On how the strong government-industry R&D collaboration to create CFC substitutes came about since 1993, Mr Wadhwa said the technologies were closely held in the hands of a few MNCs, which were not willing to part with these after having spent billions of dollars. Having gone into the business process through heavy investments, it would have been foolish on our part to exit from this business altogether.

On exports, he said, "Today our own OEMs are looking at exports as a potential growth area, where you need to have a CFC-free product for survival." He said production and consumption were the two major elements of the CFC phase-out programme. On the continuing co-operation with Government, he said there was plenty of procedural involvement. "We have to do data reporting at various stages, such as at the time of obtaining an export licence, we have to give data on the earlier licence use, file quarterly return of our exports and submit the entire data on who we have sold the products to domestically, item by item, as per the specified Ozone Rules 2000."

And having got into the Protocol, we are fully aware of the national obligations and commitments. But we also have to remain in business and deal with the same markets and customers, and feed different substitutes to the same set of customers.

He clarified that Article 10 of the Protocol provides for the financial mechanism and 10A provides for technology transfer for both user and producer segments of the industry on "fair and favourable terms."

Regma, founded in 1993, has already been accorded the status of an industry-NGO by the Montreal Protocol, and is considered in international fora as a unique example of industry-government co-operation in matters of public interest.

"We provide that vital continuity to the Protocol momentum, especially since we have been involved in the implementation programmes from the very beginning. We work closely with officials in the Ozone Cell as well as the Ministry of Environment and Forests (MoEF), and our views are appreciated and well received. The mutual trust has allowed us to take the process forward smoothly."

The four major CFC producers are SRF Ltd (plant located in Bhiwandi, Rajasthan); Gujarat Fluorochemicals (near Baroda); Navin Florin, a Mafatlal group company with unit in Surat; and Chennai-based Chemplast-Sanmar (with plant in Mettur). On assistance to industry through the Multilateral Funding Mechanism for technology changeover, he said the funds coming in "were too little, in too many instalments and too late."

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