Post November 2010, Indian chemical companies might face difficulties in exporting their products to

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countries in European Union as the European Commission (EC) has recently passed a legislation making it mandatory for companies to produce animal safety data, risk management data.

Export of chemicals to the European Union that include petrochemicals, agrochemicals and pharmaceuticals are worth around $2 billion every year. Indian chemical industry is estimated to be around $ 65 billion. The development assumes significance considering the already prevailing tension between EU and India over trade issues after some of the Indian drug consignments was seized at EU ports.

“The new legislation might have some impact on companies outside European Union… but the intent is not to create technical barrier for trade. The legislation is essentially aimed at facilitating trade of chemicals that do not pose higher risk for the environment,” Andreas Herdina director of cooperation at European Chemicals Agency (ECHA), which is EU’s chemical agency, told reporters.

With the legislation implemented, all chemicals’ imported into Europe have to be registered with ECHA. The agency manages processes related to regulation, evaluation and authorisation of chemicals (REACH).

The Indian companies will have to make investments to conform to the newly created legislation. "The process of generating safety data is not only time consuming but also expansive. It is a huge challenge for companies that intend to export chemicals to the EU," a top official of the Indian Chemical Council said. Cost of conducting such tests including the paper work can range between $50,000 to $2,00,000 per application, the official said. Johan Gron, executive vice president, research & development and technology at Finnish chemicals company Kemira, though admitted that the first stage of REACH might pose a lot of structural issues and challenges to companies especially those that have manufacturing facilities outside EU, but said that it will be beneficial in the long run.

European Commission also defended the legislation saying that it is an attempt towards regulation and monitoring the inflow of chemicals into the region that could pose threat to the environment.

"The credibility of the chemical industry rests upon this new legislation. If you don't get your registration, you stop production. No data and there is no market for you," Stavros Dimas environment commissioner at European Commission said.

The correspondent’s visit was hosted by Finnish industry’s press agency Finnfacts.