Kolkata, Mar 14 India may now have an edge over China in chemical manufacturing since China has withdrawn its VAT refund on chemical exports to curb chemical manufacturing on environmental grounds.

Zhejiang Longshen Group, one of the world’s largest manufacturer of disperse dyes, is entering into a 60:40 joint venture with Indian Kiri Dyes & Chemicals Ltd (KDCL), viewed as a major step in the dynamics of global chemical business.

Manish Kiri, KDCL’s managing director, said: “Zhejiang Longshen, which produces 200,000 tonne of variety chemicals every year, wants to manufacture all its product lines from India but that would be done in phases.”

The Chinese chemical industry commands over 70% of the global $2.4 trillion chemical industry. But Chinese chemical manufacturers are facing difficulties now as the Chinese government from July last year has withdrawn the 17% VAT refund on chemical exports, rendering Chinese chemical incompetitive in the global market.

“The JV would initially start producing 20,000 tonne of reactive dyes every year entailing $10 million investment. The production will be further scaled up to 50,000 tonne per annum,” Kiri said.