Indian Chemical Industry Formulated For Growth

In the wake of the government’s proactive stand toward the chemical sector in India coupled with the influx of large orders from other countries, join Anthony Fernandes as he looks at why chemical manufacturers can now set their sights on progressing ahead with the right chemistry

- Anthony Fernandes

The Indian chemical industry is widely regarded as a key component of the Indian economy, accounting for approximately 2 per cent of the GDP and 15 per cent of the manufacturing GDP in India. It is one of the fastest-growing industries in the world and currently ranked the fourth-largest in Asia and sixth in the world in terms of output after the US, China, Germany, Japan and Korea. This industry forms a significant part of the overall trade flow in India as well, ranking fourth in imports, after mineral fuels and oils, precious stones and metals, and electrical machinery. India's share in global chemical trade by value is 3 per cent.

The chemical sector in India is broadly classified into bulk chemicals, specialty chemicals, agrochemicals, petrochemicals, polymers and fertilisers. The diversification within the chemical industry is large and covers more than 80,000 commercial products. So much so that it is widely regarded as the backbone of the industrial and agricultural development of the country, providing the building blocks to many other industries such as textile, paper, paints, soaps, pharmaceuticals, detergents, etc.

The Growth Curve

India is largely driven by consumption growth and the per capita consumption of chemicals in the country is one of the lowest in the world, even when compared to other developing countries. This makes India a very attractive destination for the chemical industry to flourish in.

Among petrochemicals, the growth of this category of products in India is mainly derived from import substitution, with India importing more than USD 14 billion worth of petrochemicals. Thus, there exists an opportunity to manufacture petrochemical intermediates in India given better supply chain logistics and technology.