OVERVIEW | OPPORTUNITIES

Chemicals

 

OVERVIEW

SIZE

• Over $35 billion industry in 2006-07 - constitutes about 3% of GDP; 17.6% of manufacturing sector - a significant component of the Indian economy
  • India is the 12th largest producer of chemicals in the world
    • Manufactures more than 70,000 products
    • Exports of over $17 billion in 2006-07 (14% of total exports from India)
• However, India constitutes a relatively small portion of the global market
  • 1.9% of global sales and 1.5% of international trade

TOP

STRUCTURE

• The Chemicals industry in India is fragmented with few large companies
  • Over 6,600 chemical manufacturers
  • Basic chemicals constitute major share of exports
  • Major international companies such as BASF, Bayer and Du Pont have operations in India

TOP

POLICY

• 100% FDI under the automatic route is allowed for all chemical items except hazardous chemicals where government/FIPB approval and license to manufacture are required
• Petroleum, Chemicals and Petrochemical Investment Regions (PCPIR) policy aimed at developing India as a hub for these sectors
  • Investment regions with an area of around 250 sq. km
• Plans are underway to set up port based chemical parks in SEZs to encourage clustering, provide infrastructure and enable tax concessions
  • Downstream SEZs have been planned to use the output of Chemical Parks

TOP

Major Players	Revenue (US$ million) (FY 2006-07)	Areas of Operation	Promoter
Public Sector
Indian Farmers Fertiliser Co-operative Ltd.	2,348	Fertiliser	GOI
National Fertiliser Ltd.	865	Fertiliser	GOI
Rashtriya Chemical Fertilizers Ltd.	793	Fertiliser	GOI
Domestic Private Sector
Indian Petrochemicals Corporation Ltd.	2,757	Petrochemicals	Reliance Group
Tata Chemicals	897	Fertiliser, Soda Ash, Food Additives	Tata Group
Haldia Petrochemicals Ltd.	860	Petrochemicals	Chatterjee Group
International Private Sector
Castrol India	460	Lubricants	BP Plc
ICI India	237	Paints	ICI
Bayer India	200	Agrochemicals	Bayer

Source: Capitaline

TOP

TOP

OPPORTUNITY

Chemicals sector is expected to grow at over 15% p.a.	India requires large investments in chemical plants

TOP

OUTLOOK

• Projected to grow to a US$70 billion industry by 2012
  • Growth rate of over 15% p.a. projected over the next 5 years
  • Share of the global industry could increase from 1.9% (2007) to 2.6% (2012)
  • India is expected to be the third largest polymer consumer by 2010

TOP

POTENTIAL

• Large and growing domestic market potential due to low per capita consumption of key petrochemical derivatives
  • 5 kg. against global average of 25 kg. for plastics
  • 4 kg. against global average of 23 kg. for polymers
• Good R&D base with access to low-cost, high-quality human resources
  • Proven capability for chemical process development
• Major raw materials are available within the country or readily importable
  • SEZs have no import tariffs and provide income tax concessions
  • PCPIRs with a refinery/ petrochemical feedstock company as an anchor tenant would be suitable locations for domestic and export led production in petroleum, chemicals & petrochemicals
• Strategic location: In the heart of the high-growth markets of India, Asia and the Middle East
• Vibrant downstream industry and a large number of manufacturers provide options for joint ventures, alliances and acquisitions
• Major opportunities lie in all segments: Basic, Specialty and Knowledge Chemicals
  • A strong global presence in the export of dyes, pharmaceuticals and agrochemicals
• Investment opportunity of over US$75 billion in the next 10 years

TOP

TOP

For additional information: Department of Chemicals and Petrochemicals, Ministry of Chemicals (http://www.nic.in/cpc), Indian Chemical Manufacturers Association India (http://www.icmaindia.com)