India Chemical Industry, Share, Trends, Analysis and Forecast 2021-2027

 

Basic chemicals and their related products (paints, varnishes, glass, petrochemicals, fertilizers, perfumes, toiletries, pharmaceuticals, and others) constitute a considerable part of the Indian economy. Among the most diversified industrial sectors in India, the chemical industry covers an array of over 70,000 commercial products. Globally, India is considered as the sixth largest producer of chemicals and the third largest producer in Asia, in terms of output. As per India Brand Equity Foundation (IBEF), India ranks third in the production of agro chemicals globally and contributes nearly 16% to the global production of dyestuff and dye intermediates. Moreover, the chemical sector is expected to see a two-fold growth, reaching to US$ 300 billion by 2025, projecting an annual growth rate of 15-20%. To accomplish this goal, the Government of India is working on a chemical policy that will focus on meeting the rising demand for chemicals and reduce imports.

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Chemical Organizations/Associations in India

Government Ministry/Department

·        Department of Chemicals & Petrochemicals, Ministry of Chemicals & Fertilizers

Industry Associations

·        Alkali Manufacturers Association of India

·        Chemicals & Petrochemicals Manufacturers Association

·        Crop life India Dye Manufacturers Association of India

·        Indian Chemical Council

·        Indian Speciality Chemical Manufacturers Association

·        Organization of Plastic Processors of India

·        The All India Plastic Manufacturers' Associatio

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India’s Trade Flow in the Chemical Sector

The chemical industry’s import–export rankings have been consistently high for the past five years, since 2019. In the same fiscal year, the industry ranks third in Indian exports, appearing after mineral fuels and oils, and precious stones and metals, with a 8-9% share. Chemicals ranks fourth in imports, after mineral fuels and oils, precious stones and metals, and electrical machinery, also with a 14-15% share, as per IBEF. In 2018, major trading partner for India in chemicals were the US, China, Brazil, United Arab Emirates and Germany for exports and China, US, Singapore, Saudi Arabia and Korea, for imports.

Government Policies and FDI Investments

Government has recognized the chemical industry as a one of the key elements for the growth of the Indian economy. In chemical sector, the government has allowed 100% FDI. Most of the chemical products manufactured in India are delicensed. The entrepreneurs need to submit only IEM with the DIPP provided no locational angle is involved. Only the following items are covered in the compulsory licensing list due to their hazardous nature-

·        Hydrocyanic acid & its derivatives

·        Phosgene & its derivatives

·        Isocynates & di-isocynates of hydrocarbons

Investment policies:

·        Target to increase the share of manufacturing in GDP to at least 25% by 2025. Investments in chemical manufacturing is absolutely essential to ensure growth of the Indian chemical industry

·        Government’s proposal to set up of a technology up-gradation fund of around $80 million in the 12th plan for chemicals.

·        Proposal to establish an autonomous $100 million chemical innovation fund by securing 10% of the total inclusive national innovation fund set up by the National Innovation Council to encourage commercialization efforts for innovations generating inclusive growth.

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Growth drivers of the Indian Chemical Industry

Shift in production towards Asian and Southeast Asian countries in all sectors is increasing the demand for chemicals and petrochemicals in these regions. As per Invest India, the petrochemical demand is expected to grow at 7.5% CAGR during fiscal year 2019-23, with polymer demand growing at 8%. This is due to the shift in consumer preferences towards organic and environment-friendly chemical products, such as petrochemicals, for a healthier lifestyle. There are several other trends mentioned by Invest India for the chemical industry, which are expected to be seen in the near future.

 

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