Chemical industry is one of the oldest industries in India. It not only plays a crucial role in meeting the daily needs of the common man, but also contributes significantly towards industrial and economic growth of the nation
The global chemical` industry, estimated at US$ 2.4 trillion, is one of the fastest growing sectors of the manufacturing industry. Despite the challenges of escalating crude oil prices and demanding international environmental protection standards now adopted globally, the chemicals industry has still grown at a rate higher than the overall-manufacturing segment.
As per industry reports the pharmaceutical segment contributes approximately 26% of the total industry output and approx. 35-40% is dominated by the petrochemical segment.
Commodity chemicals is the largest segment in the chemicals market with an approx. size of $ 750 billion while the specialty and fine chemicals segment accounts for $ 500 billion.
Some of the major markets for chemicals are North America, Western Europe, Japan and emerging economies in Asia and Latin America. The US consumes approximately one-fifth of the global chemical consumption whereas Europe is the largest consumer with approx. half the consumption. The US is the largest consumer of commodity chemicals whereas Asia Pacific is the largest consumer of agrochemicals and fertilizers.
Indian Chemical Industry Scenario
Chemical Industry is one of the oldest industries in India, which contributes significantly towards industrial and economic growth of the nation. It is highly science based and provides valuable chemicals for various end products such as textiles, paper, paints and varnishes, leather etc., which are required in almost all walks of life. The Indian Chemical Industry forms the backbone of the industrial and agricultural development of India and provides building blocks for downstream industries.
Chemical Industry is an important constituent of the Indian economy. Its size is estimated at around US$ 35 billion approx., which is equivalent to about 3% of India's GDP. The total investment in Indian Chemical Sector is approx. US$ 60 billion and total employment generated is about 1 million. The Indian Chemical sector accounts for 13-14% of total exports and 8-9% of total imports of the country. In terms of volume, it is 12th largest in the world and 3rd largest in Asia. Currently, per capita consumption of products of chemical industry in India is about 1/10th of the world average. Over the last decade, the Indian Chemical industry has evolved from being a basic chemical producer to becoming an innovative industry. With investments in R&D, the industry is registering significant growth in the knowledge sector comprising of specialty chemicals, fine chemicals and pharmaceuticals. The Indian Chemical Market Segment wise is as under: -
|Segment||Market Value (billion US$)|
|High End / Knowledge Segment||6|
The Indian Chemicals Industry comprises both small and large-scale units. The fiscal concessions granted to small sector in mid-eighties led to establishment of large number of units in the Small Scale Industries (SSI) sector. Currently, the Indian Chemical industry is in the midst of a major restructuring and consolidation phase. With the shift in emphasis on product innovation, branch building and environmental friendliness, this industry is increasingly moving towards greater customer orientation. Even though India enjoys an abundant supply of basic raw materials, it will have to build upon technical services and marketing capabilities to face global competition and increase its share of exports.
As the Indian economy was a protected economy till the early nineties, very little large-scale R&D was undertaken by the Chemical industry to create intellectual property. The Industry would, therefore, have to make large investments in R&D to successfully counter competition from the international chemicals industry. India has a number of scientific institutions and the country’s strength lies in its large pool of highly trained scientific manpower.
India also produces a large number of fine and specialty chemicals, which have very specific uses and are essential for increasing industrial production. These find wide usage as food additives and pigments, polymer additives, anti-oxidants in the rubber industry, etc.
The Dyestuff sector is one of the important segments of the chemicals industry in India, having forward and backward linkages with a variety of sectors like textiles, leather, paper, plastics, printing inks and foodstuffs. The textile industry accounts for the largest consumption of dyestuffs. From being importers and distributors in the 1950’s, it has now emerged as a very strong industry and a major foreign exchange earner. India has emerged as a global supplier of dyestuffs and dye intermediates, particularly for reactive,acid, vat and direct dyes. India accounts for 7% of the world production.
Chemical fertilizers and pesticides played an important role in the “ Green Revolution” during the 1960s and 1970s. Indian exports of agrochemicals have shown an impressive growth over the last five years. The key export destination markets are USA, U.K., France, Netherlands, Belgium, Spain, South Africa, Bangladesh, Malaysia and Singapore.
India is one of the most dynamic generic pesticide manufacturers in the world with more than 60 technical grade pesticide being manufactured indigenously by 125 producers consisting of large and medium scale enterprises (including about 10 multinational companies) and more than 500 pesticide formulators spread over the country.India is the 4th largest producer of agrochemicals after USA, Japan and China. The agrochemicals market in India is Rs.4500 crores.
The government is promoting research on the use of alternative and safe pesticides using neem seeds. A country programme entitled “ Development and production of neem products as Environment Friendly Pesticides” is being undertaken by the Department of Chemicals & Petrochemicals with the financial assistance of United Nations Development Programme (UNDP).
In Chemical Sector, 100% FDI is permissible. Manufacture of most chemical products inter-alia covering organic / inorganic, dyestuffs & Pesticides is delicensed. The entrepreneurs need to submit only IEM with the Department of Industrial Policy & Promotion provided no locational angle is applicable. Only the following items are covered in the compulsory licensing list because of their hazardous nature.
- Hydrocyanic acid & its derivatives
- Phosgene & its derivatives
- Isocynates & di-isocynates of hydrocarbons.
- The peak rate of Customs Duty on most Chemicals is 7.5%
- On basic raw materials like acid grade fluorspar, sulphur, rock phosphate, natural borates is 5%
- On most building blocks & feedstock the duty is 5% (ethylene, propylene, crude, naptha, benzene, toluene, xylene, ethylbenzene)
On almost all chemicals the excise duty is 16%
Group-wise capacity & production of major chemicals in organized sector
|Main Groups||Installed Capacity||Production(Figures in MT)|
|TOTAL MAJOR CHEMICALS(I+II+III+IV+V)||10346994||5989604||6644586||7095895||7408191||7675622||7533991||7533991||7316771||7533858||8021815|
GROUP - WISE EXPORT & IMPORT OF CHEMICALS
|Group||ITC- HS Commodity Level Code||TRADE||2001-02||2002-03||2003-04||2004-05||2005-06||2006-07||2007-08||2008-09||2009-10||2010-11||2011-12|
|INORGANIC CHEMICALS *||2 DIGIT- 28||Export |
|ORGANIC CHEMICALS||2 DIGIT- 29||Export |
|DYEING, TANNING AND COLOURING MATTER||2 DIGIT- 32||Export |
|PESTICIDES||4 DIGIT -3808||Export |
|Grand Total||Export |
*INCLUDING COMPOUNDS OF PRECIOUS METALS, OR RARE-EARTH METALS, OF RADIO-ACTIVE ELEMENTS OR OF ISOTOPES AS CLASSIFIED BY DGCIS KOLKATA.
Leading Chemical Units
- M/s.United Phosphorous Ltd, Mumbai
- M/s. P.I.Industries, Jaipur M/s.BASF India, Mumbai
- M/s.BASF India, Mumbai
- M/s. Excel India, Mumbai
- M/s.Atul Ltd., Bulsar
- M/s. Colour Chem Ltd., Mumbai
- M/s. Sudarshan Chemical Industries, Pune
- M/s.Colourtex, Ahmedabad
- M/s. Monsantu Chem Ltd., Mumbai
- M/s. Jubilant Organosys Ltd., New Delhi
- M/s. Herdilia-Schentady Ltd. Mumbai
- National Organics Chemicals Ltd., Mumbai
- DCM Sri Ram Consolidation Ltd., New Delhi
- M/s. Gujarat Heavy Chemicals Ltd., Ahmedabad.
- M/s. India Glycols Ltd., New Delhi
- M/s. Gujarat Alkalies and Chemicals Ltd., Baroda
- M/s.Rayalseema Chemicals, Hyderabad
- M/s. Galaxy Organic Ltd., Mumbai
- M/s. Lubrizol Ltd., Mumbai
- M/s. ICI Calcutta