Mumbai: Dow Chemicals, the world''s second-largest chemical manufacturer, has signed an agreement with Gujarat Alkalies and Chemicals (GACL), a Gujarat government company, to set up a chemicals plant in the state.

This new chemical plant is proposed to be set up in a 50:50 JV between GACL and Dow. GACL is already leader in manufacturing caustic chlorine with a basket of 26 diversified products. He refused to divulge any information on the investment and size of the proposed plant.

GACL, with annual sales of Rs1,000 crore, said in a notification to the stock exchanges on Monday the company and Dow Europe have signed a memorandum of understanding (MoU) for exploring a long-term and strategic business relationship in the area of chlorinated organics based on the inherent strength of both the companies.

Dow''s move comes at a time when the issue of compensation to the victims of the 1984 Bhopal gas tragedy continues to simmer. India has clarified that Dow Chemicals'' investments in the country will not be affected as a result of the Bhopal gas tragedy even as the government would like to see the court processes resolved and the issue addressed.

GACL and Dow are also exploring opportunities for product sharing and marketing. Dow is present in 175 countries and GACL exports its products to the US, Europe, Australia, Africa, Far and Middle East countries, China and South Asian markets.

Dow is the world''s largest supplier of chlorinated organic products and services. These products include chlorinated solvents and chlorinated intermediates.