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BASF and Partners to Put Their USD 4 Billion India Chemical Complex on Hold Due to COVID-19

BASF, a German-based multinational company and the largest chemical producer in the world, announced that its plans to build a petrochemicals complex in India worth USD 4 billion with its partners had been put on hold because of the rising uncertainty in the country’s economy caused by the pandemic. The company and its partners concur that the shaken economy of India would not be suitable to build a new petrochemical complex as there is less demand in the recovering market. Despite all the efforts by the company to optimise the scope and the configuration, the project has been temporarily suspended.

In October 2019, BASF signed a memorandum of understanding with companies like Borealis AG, Adani Group, and Abu Dhabi National Oil Company (ADNOC) in order to evaluate the collaboration between the companies to build the chemical complex in Mundra, in Gujarat, India. However, not just India, but also the entire global economy has been affected by the COVID-19 pandemic, causing uncertainties in the economy in the coming years, thus, giving the partners time to review the undertaken investment.
BASF has also cut down its investment budget as the COVID-19 hit automakers, who are the chemical company’s biggest clients. The chemical industry profits are affected strongly by a downturn because of the industry exposure to other sectors such as car makers, while massive overheads prevented swift cost-cutting.
The plant in Mundra, Gujarat would have been the first plant in the world, which was to be fully powered by renewable energy. It was also the biggest investment by the German giant BASF in India. Under the company’s India plan, the partners planned to build a plant to produce propylene from propane gas, which was to be supplied by ADNOC.
With investments held back and the market collapsing due to a weakened economy across the globe, the company and its partners are still, however, convinced that the Indian market will act as a significant sector to invest in, in the upcoming years. The company has also decided to keep exploring the Indian market conditions periodically in order to look for opportunities for investment that might arise in the near future.


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