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About Chemicals

Introduction

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

Global Scenario

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$)
Basic Chemicals 20
Specialty Chemicals 9
High End / Knowledge Segment 6
Total 35

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.

Dye Industry

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.

Pesticides Industry

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).

Licensing Policy

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.

Customs Duty

  • 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)

Excise Duty

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)
Year 2009-10 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
1 2 3 4 5 6 7 8 9 10 11 12
I:ALKALI 7489600 4342305 4792345 5070374 5271675 5474614 5268987 5268987 5427233 5601913 5981204
II:NORGANIC 715915 374132 403827 440608 508157 543965 602309 602309 512513 517511 572052
III: ORGANIC 1940457 1166575 1352653 1473855 1505895 1545262 1545442 1545442 1254171 1281169 1339589
IV: PESTICIDES 146471 81803 69565 85118 93966 82240 84701 84701 85218 82185 81934
V DYES 54551 24789 26196 25940 28498 29541 32552 32552 37636 51080 47036
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
Import
1259
5730
1946
5579
1949
5916
2871
8130
2431
10446
3629
11473
3317
11393
5166
-
4540
16270
14008
17236
5106
20763
ORGANIC CHEMICALS 2 DIGIT- 29 Export
Import
7624
8795
10190
10695
12975
14363
16269
18785
21504
22776
25950
27330
28870
32642
34058
-
35241
44505
41940
57550
40097
51230
DYEING, TANNING AND COLOURING MATTER 2 DIGIT- 32 Export
Import
2436
1138
2943
1344
3112
1617
3111
1878
3750
2245
4562
2720
5327
3031
5900
-
6556
4328
7570
5434
6753
5370
PESTICIDES 4 DIGIT -3808 Export
Import
1356
362
1487
287
1746
501
2096
712
2791
754
2877
806
5969
7357
8615
-
8611
11579
10275
13935
9098
13749
Grand Total Export
Import
12675
16025
16566
17905
19782
22397
24347
29505
30476
36221
37018
42329
43483
54423
53739
0
54949
76682
76359
81110
65462
91111

*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