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Chemical Industry of India

The Indian chemical industry is one of the oldest and fastest growing industries in India. It is currently worth $150-155 billion and expected to double to $300 billion by 2025. The industry produces over 70,000 commercial products across sectors like inorganic chemicals, drugs, plastics, pesticides, and specialty chemicals. While opportunities exist in areas like biodegradable polymers and value-added products, challenges include availability of feedstock, infrastructure, technology access, and ease of doing business. The government aims to make India's chemical industry $300 billion by 2025 by increasing domestic demand and reducing import dependence.

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168 views3 pages

Chemical Industry of India

The Indian chemical industry is one of the oldest and fastest growing industries in India. It is currently worth $150-155 billion and expected to double to $300 billion by 2025. The industry produces over 70,000 commercial products across sectors like inorganic chemicals, drugs, plastics, pesticides, and specialty chemicals. While opportunities exist in areas like biodegradable polymers and value-added products, challenges include availability of feedstock, infrastructure, technology access, and ease of doing business. The government aims to make India's chemical industry $300 billion by 2025 by increasing domestic demand and reducing import dependence.

Uploaded by

Ritika
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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INTRODUCTION

The Indian chemical industry is not only one of the oldest industries in India but also one of
the fastest growing industries of our economies. For years, this industry has played the role of
a driving engine of manufacturing sector in our economy.

India is the sixth largest producer of chemicals in the world and third largest producer in Asia
in terms of output. The Indian chemical sector is currently worth USD 150-155 billion and it
is being expected to double its size at USD 300 billion by 2025 if continues to grow at the rate
8 to 10 per cent like it does presently. Cumulative FDI in the industry till June 2017 from April
2000 stood at US$ 13.972 billion. Export of chemicals stood at US$ 12.15 billion during the
year 2016-17.

Indian chemicals have always been a multi-product and a multi-faceted industry, based on the
principle of diversification. Chemicals cover an array of more than 70,000 commercial
products. The industry is diversified into a variety of factors such as the inorganic chemicals,
drugs and pharmaceuticals, plastics and petrochemicals, pesticides, fertilizers and other agro-
chemicals, specialty and fine chemicals like dyes and paints, etc. Specialty chemicals and agro-
chemicals are the two fastest growing sectors among them.

The US, the UAE, the UK, Bangladesh and Saudi Arabia are the leading importers of
cosmetics, toiletries and essential oils among the chemicals.

Top chemical companies in India include Pidilite Industries Ltd, Tata Chemicals Ltd, UPL Ltd,
Gujarat Fluoro Chemicals Ltd and others. Their units are widely spread all over the country
with industrial application and agricultural chemical industries being clustered around basic
chemical industries.

OPPORTUNITIES FOR THE INDUSTRY

There are several opportunities for the chemical industry to grow. This includes increase in
demand for biodegradable polymers, performance plastics, and other value-added chemical
products. Out of environmental concerns and awareness, an increasing need for value-added
chemical products and R&D in the same is required. The new ‘Make In India’ initiative would
also play a pivotal role in boosting the growth of the Indian chemical industry. Another
opportunity comes with the increasing rate of development in countries of Africa, Middle East,
and Asia-Pacific such that they provide more scope for export of chemicals than the already
developed countries. Indian also has the option of setting up its chemical plants in countries
like Myanmar, Iran, and Mozambique such that it can avail raw materials at cheap and
affordable prices.

CHALLENGES TO THE INDUSTRY

Restraints the chemical industry is facing today include availability of key feedstock,
infrastructure status, scale of operations, access to technology, energy security and ease of
doing business. These issues have hindered industry growth and it needs Government
interventions to achieve its true potential. Adoptions of alternate feedstock, increasing
investment in R&D and achieving scale through collaboration are some of the key levers
industry can act upon to overcome these challenges. Other critical issues include negative
attitude towards the plastics and petrochemical sector, the need to rationalise regulations related
to environment, issues related with FTAs (free trade agreements), etc.

As far as the impact of GST implementation on the chemical industry is concerned, a positive
feedback has been received. The industry has long suffered from added taxations on their
production capacity as well as their consumption demands. The older taxation ended up
increasing the production costs resulting in the price-hike of the end products thereby making
such goods unaffordable for gross consumption. GST implementation helps avoid double
taxation at combined rates and keeps the rates of state-level tariffs consistent throughout the
country. This allows chemical manufacturers to produce chemicals and supply them to different
states without any additional taxable duties.

FUTURE POLICY

Department of Chemicals and Petrochemicals is now focusing all its efforts to achieve the
objective of making the Indian chemical industry a USD 300 billion industry by 2025. The
industry is also targeting chemical exports of USD 18 billion by 2020. The department has
announced that a draft chemical policy was being worked out such that it would be aimed at
increasing the demand for these chemicals in the domestic market and at the same time reduce
our dependency on the imports. This means that the department will focus on increasing the
capacity of the industry to meet the internal needs.

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